Schaeffler AG Aktie

Ladies and gentlemen, welcome to the Schaeffler AG Q1 2026 Earnings Call. I am Sargen, the Chorus Call operator. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's a pleasure to hand over to Heiko Eber, Head of Investor Relations. Please go ahead, sir.

Thank you very much. Ladies and gentlemen, I'm very happy to welcome you to today's call on Schaeffler financial results Q1 2026. The press release, the following presentation and our interim statement has been published today at 8:00 a.m. CET on our Investor Relations home page. And as always, we will provide the recording and the transcript of the webcast after the call. I'm sure that you have all taken notice of our, by now, well-known disclaimer.

As always, Klaus Rosenfeld, our CEO; and Christophe Hannequin, our CFO, has joined the conference call to guide you through the key information in our presentation. And afterwards, both gentlemen will be available for our Q&A session.

And now let me hand over to our CEO, Rosenfeld.

Thank you very much, ladies and gentlemen. Welcome to our Q1 earnings call. You all received the presentation that Christophe and myself will share in the next minutes. Please follow me on Page #3 with a quick overview. I think you saw the numbers. From our point of view, a good summary to say we started well into the year in an environment that is certainly challenging and in some areas, unpredictable.

Sales growth FX adjusted 1% up. We'll share the details in a moment. The gross profit margin is at 21.6%, so more or less the same margin like Q1 2025, clearly driven by operational gains in E-Mobility, VLS and BIS with a slightly negative development in PTC, that should not come as a surprise. EBIT margin at 5%. Clearly, an improvement in E-Mobility, while PTC, VLS and BIS contributed strongly to the EBIT, also supported by lower R&D costs.

Free cash flow seasonally negative with minus EUR 209 million. You know that in Q1, it was EUR 155 million, Christophe is going to give you more detail. This also includes higher restructuring cash out and some advanced customer payments in the prior year. And yes, EPS is slightly positive, also impacted by the financial result.

Page 4 gives you the breakdown of where we grew, where we not grew. 6% growth in E-Mobility in the first quarter is certainly pointing in the right direction. Powertrain & Chassis, as I said before, slightly down and then moderate growth in VLS and BIS, certainly also driven by the environment. The strongest growth came out of region, Asia Pacific, However, that still has the impact that we explained several quarters now, are embedded with a switch from a bigger project from China to Korea.

More important, Page 5, if you look at the auto powertrain OEM business, and that spans across E-Mobility and PTC, breakdown by powertrain type, quite interesting picture here. Schaeffler outperformed in all these 3 different powertrain types. 4% outperformance in BEV segment, 16% versus market growth of 12%; HEV, an outperformance of 1.5%; and even in ICE, where our sales drop was not as big as the market.

That is exactly what I hope were that I can show you these pictures continuously for the next quarters, but that all points in the right direction. Order intake, again, by powertrain type, we'll come back to the numbers per division, also shows that in the important best sector, we are showing a book-to-bill of bigger than 1, while in the other sectors in this quarter, order intake was lower than relevant sales levels.

Page 6, E-Mobility. As I said, order intake for the whole division is certainly bigger than just for BEV powertrain solutions, is EUR 1.2 billion, what leads to a book-to-bill of 1.0x.

You may question, why that? We showed you in the last quarter that we have an order book by end of the year 2025 of more than EUR 40 billion. We are adjusting also volume assumptions constantly. And we are sure that with that order book we have at the moment, enough to do to deliver. So we are a little bit more selective on order intake. EUR 1.2 billion is a good result, and it's also driven by the right projects.

Now let me go from BEV to Powertrain & Chassis. Also there, an order intake of EUR 1.4 billion was slightly below last year, was driven by phaseout and also by market development. And as I said before, the gross margin has suffered a bit. It is also impacted by one-off impacts that we can discuss in the Q&A.

Vehicle Lifetime Solutions with a 1% growth that is less than before, but a further improved gross margin, that also leads to a superior EBIT margin. Here, we can say that, as you see in the highlights that our platform business, in particular, in China, is growing, serving an increasing number of retail partners, and we are also proud to say that we won the Sustainability Award for the E-Axle Repair Tool, what again demonstrates that, that is not just a PTC business but also very active in the new powertrain solutions.

And then last but not least, Bearings & Industrial Solutions, a good development, 1.6%, good outperformance and also a growing book-to-bill ratio with certainly a different time horizon of the order book.

There, just to mention one thing that also points to the new businesses, we are proud that we were part of the Artemis II launch, one of the most spectacular space activities in the last weeks, and were represented here with some high-performance turbo pump spinning bearings that have sort of highest-quality offers. So Bearings & Industrial Solutions, as you see from the rocket, is definitely moving in the right direction in its repositioning and performance drive.

Then one page on new growth. We have selected here, again, the humanoid because that is what we -- from all the questions we get, obviously, the one that is most interesting to you, three points, just to put it in perspective and give you a little bit more data, how we look at this.

This is a business that is in a situation where we are building the business. We are engaging today with [ 45 ] different customers and engaging means active conversations, of which 30 prototype orders have resulted. And from these 35 -- 30 prototype orders, 5 contracts have been secured.

You will understand that I cannot mention here the names, but I can tell you that from the 5, these are prominent names, both from China and the U.S. and from Europe. And we are in ongoing negotiations to further build the order book.

If I look at what we have today and put our more conservative assumptions of a million robots in 2030 behind it, our best estimate at the moment is that this order book in total order intake from the 5 customer contracts included has a value of somewhere in midsized 3-digit million range.

For sure, that is further building and we'll give you -- as soon as these numbers are more solid, we will give you more information on how that develops. That's what I can say at the moment for Q1 customer side.

Last point here, we will see first SOP from these customer contracts in Q2 '26 and then also have scheduled further SOPs for Q3 and Q4 2026. So you see the business is building, it is growing. We are part of the companies that is here at the forefront of the development. And the number of inquiries also from German OEMs is interestingly increasing.

What helped us was also the recognition for our products. As some of you heard, we won the prestigious Hermes Award at the Hannover Fair. You see a small picture here that recognizes our rotary actuator platform in multiple sizes and multiple sort of nanometers and other functions. That's a positive thing. And as you all know, we will continue to expand our Automotive know-how into this area.

Last point is on manufacturing. We are investing into that business, not only for building the business, but also for making sure that we can scale what we need to scale.

I finish on Page 11 with my last page before I hand over to Christoph. Capital allocation continues to be driven by a very disciplined approach. Capital employed has been further reduced also through the project that we explained to you in the Q4 results.

We had CapEx in Q1 of EUR 237 million, more or less in line with previous year. The investment grade stands at 0.5x and the capital employed at the end of the first quarter was EUR 12 billion. From an average point of view, Q1 over the last 12 months, this is a reduction of EUR 974 million. You see where we spent the money. And I can assure you again, we are disciplined, but also able to invest into the new growth businesses based on our strong cash conversion.

With that, I hand over to Christophe.

Thank you, Klaus. Good morning, everyone. As explained by Klaus, very solid first quarter for 2026. So taking a step back and walking you through a couple of slides on sales and gross profit and then EBIT.

We see on Slide #12 the slight growth year-over-year, 1% of growth FX adjusted, demonstrates the confirmed scale-up of our E-Mobility activities. The slight erosion is planned from PTC, especially as we disposed of some activities at the end of last year.

Slight slow start from VLS, but nothing to worry about on the year to go. This is mainly driven by some negotiations with some of our key customers that impacted a little bit the sales at the beginning of the year, we will catch up and no issues whatsoever on the year to go for VLS. Last but not least, BI&S also having an encouraging start beginning of the year for Q1.

If you look at the makeup of our gross profit bridge going from 21.7 to 21.6, so more or less stable, you see a strong contribution from price. So a little bit of that is linked to compensating for the U.S.-related tariffs, but the rest is also the pricing policy that you see mainly for us within VLS and B&IS. The volume, slight decrease there, as I mentioned before, mostly related to PTC and as a result of decisions we took at the end of last year.

The one that I would like to draw your attention to is the EUR 67 million of improved production cost year-over-year, a combination of structural improvements year-over-year as the restructuring programs pay off as we continue to drive efficiencies in our plants. And also happy to report, a significant part of it is related to our purchasing performance and the evolution of our raw material prices or our purchasing performance in general.

On the other cost of sales, some impact from the U.S. tariff, there's about [ EUR 20 million ] in there. And then a not very helpful comparison to last year from an inventory revaluation standpoint, where we had a very strong quarter last year. We changed the method this year in order to smoothen this out a little bit and make it easier to understand and steer.

But we took the hit there on the comparison. On a full year basis, this disappears. And hopefully also it will give us a more streamlined earnings and EBIT profile for 2026.

I will finish on this slide by pointing out the FX impact on our gross profit line, still negative, mainly driven by the U.S. dollar, the RMB and the Indian rupee. And we could have listed as well the Ukraine war, which is impacting us quite a bit.

On the next page, you see the EBIT walk, increasing by 0.3 points year-over-year. I already mentioned the gross profit evolution, which is very favorable for us. The other interesting news on there is the progress on R&D expenses, which is both increased efficiency in the way we conduct our development programs as well as some of the benefits of some of the restructuring that we've been doing in this field.

Again, the SG&A suffering a little bit from the comparison with last year. There's some timing impacts in there. And there's also the impact of higher cost this year related to our S/4 HANA rollout and the fact that we are heavily investing in digitalization and AI deployment within the organization. That [ inflation ], mostly offset by our performance programs, which is what I'd like to see in the P&L.

You see that at the EBIT level, FX switches back to a positive level. This is due to two main aspects. The first one is there is a natural hedge within the group between the different lines of our P&L, depending on where we sell and where we spend. And we also have in there the impact of some of the hedging instruments that are paying out favorably and protecting us against the [ evolution ]. So again, a solid 5% of EBIT, which puts us in a good shape for the full year guidance that we'll discuss a little bit later.

I will go very quickly through the different slides. But E-Mobility, clearly, the scale-up paying off, both in terms of production efficiency as well as the R&D piece, driven the -- growth on the top line driven mostly this time for this quarter by the controls part of the business, but overall, unfolding as we had forecasted for 2026.

On the PTC side, again, sales decline, which is known, planned and accounted for. The EBIT level remains very, very strong in the double-digit range. The 12.7% from Q1 2025 was a very, very, very high comp, but the 11.5% for Q1, again, clearly in line with what we were expecting when you think about, again, our guidance on the right -- on the good side of the guidance approaching the top end of it.

On Vehicle Lifetime Solutions, 0.9% of growth year-over-year, not completely what we used to. VLS, nobody grows stronger, stronger than this and will grow stronger than this on a full year basis. This is just a slow start for Q1, but no warning, no alerts, no reason to worry on the year to go, the volume piece will catch up. Despite this, an extremely strong, almost 16% worth of EBIT driven, as I mentioned before, but also a strong pricing policy.

The other encouraging point, I think already mentioned by Klaus is the expansion of our platform business on a global basis, which means that we are successfully diversifying out of Europe and out of the traditional repair and maintenance solution activities.

On the Bearings & Industrial side, I'm not getting bored of saying this every time, but it's a very, very interesting combination of both growth and restructuring and operational performance, driving a very, very solid first quarter at 9% EBIT. The 10% last year, again, very hard to beat the comparison, which was mainly driven by the inventory valuation topic that I mentioned before and which was followed by a complicated or weaker Q2 in 2025.

The change in method takes us away from that. And the 9%, again, very, very much on the progress path for B&IS, for Bearings & Industrial Solutions that we highlighted during the Capital Market Day, it is paying off, and they are executing properly.

Free cash flow, seasonally impacted as usual within the group. Klaus already mentioned the slightly higher restructuring payments that you find in the Others category. Net working capital impacted by a conscious decision to raise our inventory levels and buffers in order to ensure that our customers are protected and safeguarded in a very volatile supply environment.

This is something we will work down throughout the year as the situation stabilizes and hopefully resolves itself. But the decision was made there to invest a little bit in working capital to protect our customers.

CapEx, as planned, in line with the investment plan for this year with quarter 1 that is where we expected it to be. From -- if I move on to the next page, you'll see, again, a not very surprising evolution or lack of evolution of our leverage ratio in the 2.1, 2.2, 2.2 range. Our maturity profile remains extremely well balanced with the upcoming maturities already prefunded, and we will continue to work on this as opportunities arise.

Then that takes us back to the full year guidance, which I will hand back to Klaus.

Yes. Thank you, Christophe. Very briefly, we confirm our guidance. We are, from our point of view, also with what we see in April on track here. Certainly, the impacts from the geopolitical and macroeconomic environment were not known when we approved this guidance. We have still said we will not change it and do what is necessary to stay within the range.

The 5 percentage points, 5% EBIT margin is clearly at the -- pointing to the upper end here. We need to see what the second quarters bring. You know that our business is seasonable. But what I can say here is we confirm these main KPIs.

Let me finish by a quick look at the financial calendar. The colleagues will go on roadshow, virtual, but also to the conferences. We see a lot of interest at the moment from U.S. investors, but also from Asia. So you see it on the schedule. We try to be as responsive as possible. And we thank you for your attention and interest in Schaeffler.

With that, I hand back to Heiko.

Thank you very much, Klaus. Thank you very much, Christophe. As already mentioned, if there are further needs -- if you see further need for discussion tomorrow, the virtual roadshow organized by JPMorgan. So if you have interest, please let us know.

And with this, I would say that we directly jump into our Q&A session, and I would hand back to our operator.

[Operator Instructions] And we have the first question coming from Christoph Laskawi from Deutsche Bank.

The first one would be on the humanoid SOPs that you've highlighted. Now that you are moving into series production, I was wondering if you could comment in a bit more detail on the expected revenue contribution in '26 and '27. Is it fair to assume that in '26, it's probably closer to low double-digit euro million amounts and in '27, more towards the mid- to high double-digit range? That's the first question.

And then you called out earlier that the environment is tricky currently and in some cases, unpredictable. Do you see any changes of customer behavior currently from the OEMs, any changes in call-offs also on the Industrial side? And with that in mind, should we expect Q2 to roughly trend in line with Q1? Any color that you could share there would be appreciated.

Well, let me start with the second one. Again, we are -- we have 4 different businesses. And I start with BIS. I just came back from China, and we see that there, although the macroeconomic situation sounds a little bit subdued, there is a growing interest to work with us. We don't look at the Industrial business by call-offs. That's more an Automotive concept.

And there, everything we saw, Christoph, in April doesn't look like a dramatic change. It's maybe a little softer than what we expected at the beginning of the year, but it seems to be quite resilient.

When you see the news, when you see what's going on in the world, this is to some extent a surprise, but the numbers speak rather for a little bit of a softer development in the next months, but it's not a dramatic change in direction.

So let's see how this is going to unfold and how the second quarter will look like. With what I've just said, we don't expect a dramatic change to our Q1. But certainly, Q2 is typically not as strong in terms of growth as the first quarter.

The more important question is how will this unfold? Let me give you a little bit of a logic how we do this when we now estimate what's coming. You basically -- in these contracts that we have, and I said, 5 customer contracts where you will understand I cannot mention the names, I can also not mention what kind of products the customers order, but for sure, these are the ones that we have also communicated and shown at fairs.

We typically look at the number of bots. We look at the pieces per bot, and we look at the price per piece. This is the simple logic that is behind this. Now SOPs will start in Q2. There's another customer that will then come in Q3 and another one in Q4. But this is the simple mix.

So don't expect miracles in 2026. This is not a full year, that's the start of the year. Again, this is all estimated at the moment. We have no reason to believe that these SOPs are not happening because for sure, in particular, the bigger players want to get ready for their first generation.

The real interesting question, how does it scale then? And how many more pieces are we going to expect then in 2027? Also there, what I see, and you just mentioned indicative numbers, going to 2030 revenues, I think you have a chance to go up above the 3-digit million mark. But the ramp-up curve as such, again, is premature.

Again, 2026 will be also impacted by this timing aspect that I said. If everything works well, 2027 is more a 2-digit million number. And then it will -- however, the development in terms of the numbers is -- will go up to something in the 3-digit million at the latest in [ 2030 ]. From a revenue point of view, order book is certainly already bigger than a 1-year number. That's, again, my best estimate at the moment.

We have told all of you also in the individual conversations that we will give indication today that you have a little bit of a sense what's going, but the regular reporting about order books, order intakes, revenues will need a little bit more time. Christophe and myself, we are 100% certain that we should only come out with numbers that are solid.

And we are building this business. There's a lot going on here. I could spend most of my time on this, but I can't. So give us a little bit -- be a little bit more patient, give us a little bit more time. We'll come up certainly during this year with more figures here that you can also follow what we are doing.

The next question comes from Jose Asumendi from JPMorgan.

A couple of questions, please. On the order backlog on humanoids, can you maybe just give some color maybe how broadly is split by region, maybe a little bit the geographical split, if possible?

Second, do you foresee, as we think about a 1- or 2-year view, some expansion of plants, of maybe footprint either in the U.S. or in Asia to support the humanoid ramp-up? And can you talk a bit about also your -- I believe you call it -- it's like an R&D lab that you have next to Shanghai. When do you expect to open up that center for investors to visit it?

And then second, on E-Mobility, can you talk a bit about how you reuse some of the capacity -- existing capacity you have to adapt the different powertrain trends we have globally, so we can make the best use of -- you can make the best use of fixed cost investments?

So let me start with the first question. In what I told you again with the 5 customer contracts, I can say -- again, it's a development that still needs to be more solidified. It's more or less equally balanced between China, the U.S. and Europe. It depends a little bit how you define it, whether you define it by the humanoid builder or where the end demand is coming from.

But if I just look at the big partner in the U.S. and the big partner in China, and that is together with the other ones, it is more evenly spread at the moment. So it's not China or the U.S., it's at the moment, both China and the U.S. plus a positive outlook on the humanoid players that have more a European base. You heard about Hexagon, that's the latest one where we entered into a cooperation. That's certainly a positive that this is not just one country or one region bet.

The footprint -- sorry, the humanoid factory in China is open. So if someone is interested to visit it, you just need to organize it. We have seen significant interest there. Maybe we need to organize a little bit of a tour, but it's certainly something that we would open up and show you what's going on there. It's quite fascinating, also the speed how the Chinese colleagues build that up.

Footprint to support the ramp-up. At the moment, we have not decided on any plans to change the footprint. What we have, in particular in Germany is, for the time being, sufficient, but we need to follow the development very carefully. It's a function of the ramp-up speed. If this goes very fast, we will react. If it goes more slowly, it's a different story. But we do this, as I normally say, with our eyes on the road and the hands upon the wheels. And we'll be very pragmatic to organize the necessary capacity.

At the moment, it looks like that we can more or less handle what we have without bigger footprint investments. For sure, the cumulative total investment for the next year will be another interesting figure for you. And don't forget, we'll also spend money not only for plants or machines, but also for R&D and for people.

If I may say this, my biggest challenge at the moment is to add the relevant people here to the team. This is a start-up. It's a very different environment. We have super engineers, super product developers, all of that. But if we want to build this as a global business, we also need to support David and his team, that is a global team with more talent, and that's where we're focusing on. So the next years will not only be looked at from a CapEx point of view, but also from the buildup of the right talent to drive this new market.

Don't forget, there is a very important angle to physical AI and industrial AI. This whole ecosystem is not just mechanics, it's the interface between software and hardware. And if you really want to play there, you need to understand the AI angle very carefully. Also, Christophe said this, see it in a broader context.

Then the last question was on E-Mob. Again, here, it's not so much capacity in the plant. It's more how do we optimize the fixed cost portion. We certainly have a way to go in terms of R&D. That's something that we certainly address under our existing performance program. Whether that's enough, we need to see.

In general, I can say, with the improvement in Q1 2026, for, say, over Q1 2025, if you remember this little formula that we developed, is it possible to bring E-Mobility across the line in 2026, that delta of nearly 5.5 basis points -- but the delta from Q1 '26 to Q1 2025 is 5.5 to 6 basis points. If you consider that E-Mobility is a seasonal business with a stronger fourth quarter, that shift is -- if that we can maintain that shift over the next quarters, that really points in the right direction, even if revenues come in lower than what we expected when we had our Capital Markets Day.

So let's see how Q2 goes and let's see that we are able to put the right measures in place. It's not a CapEx question so much. It's more a question of reallocating resources within the group and reducing also the R&D impact from headcount here in Germany.

The next question comes from Ross MacDonald from Citi.

It's Ross MacDonald at Citi. I have three questions. I'll again ask on the humanoids, given there's so much client interest here. Klaus, just to help us back out, let's say, a potential content per vehicle to Schaeffler from these activities, I understand you're guiding around mid-3-digit million revenue potential on the current 5 contracts, assuming a global market of 1 million humanoids in 2030, would be good to just confirm that specific point.

But then within that, what is the market share that you're assuming on that sort of revenue ambition, let's call it? I'm aware for 2035, you'd be comfortable or happy even with a 10% market share. So on that math, is that the 10% market share assumes that is driving a mid-3-digit million top line? That would be my first question.

Well, Ross, again, we are working in a market that is emerging. And that certainly needs, to some extent, a scenario approach. Our sort of conservative scenario is 1 million humanoids to be produced globally by 2030. And I can also tell you, this is start-up territory. We here at Schaeffler, we don't like hypes, we don't want to see something where we are putting too much out. We want to be conservative.

I think the 1 million humanoids, as it looks today, is a conservative number. It could increase, but we need to see. It's also a question where are they applied, and there are still very different views on this. So let's build on the 1 million and make sure that we make that and seize the upside if possible.

The second cornerstone of our calculation is also nothing new to all of you. Andreas has said this also a year ago. When we look at the bill of material of an average humanoid build for different purposes, we're talking about a 50% addressable market for Schaeffler. And if I now say if we aspire to get 10% market share of that addressable market for us, then that's basically the logic that we have in mind.

You all know that this is then a function of how costs are decreasing and how this is progressing and certainly, whether you can sell your products and your development competency to the right partners, that is, from my point of view, from a CEO perspective, the most important thing.

It's the same like in the auto market. There are so many humanoid players around, so many people that claim that they can do this and this and this. For us, as one of the sort of leading suppliers in this space, we want to do business with the right partners. And I can say, you will hopefully understand that I cannot disclose names, but the names are prominent names. We want to be selective in the ones that we bet on. And that what I see at the moment gives me a good sort of positive feeling that we have the right contracts to start with.

This is a start. It's not the situation where we can say we've already achieved everything we want to achieve. It will continue in 2026. And this concept of offering partnerships in terms of we can supply our parts and we offer people the ability to utilize their robots and learn together in a context where this is very much AI-driven, where the industrial metaverse plays a role, that is, from my point of view, the driver for success.

Let's leave it here, but I leave you the rest of the calculation. At the end of the day, what counts is really what comes out in the bottom line.

That's helpful. And maybe I will fire two more quick questions for Christophe actually. Christophe, maybe on the second quarter trading, if I look at 2025, there was quite a large step down in margin from Q1 to Q2. So you went from 4.7% to 3.5%. How should we think about the seasonality within Schaeffler this year? Would you be hoping for a less extreme margin pullback in the second quarter? How would you think about Q2 within the current guidance range?

And then a second question, just specifically on the other division, noting that was around about EUR 30 million loss per quarter on average last year, it has stepped up significantly to minus EUR 15 million loss in Q1. How should we think about modeling that specific division going forward? And maybe you can give us some color on what drove that EUR 20 million delta in Q1 versus Q4?

So first question, and I touched on it during some of my comments, Q1 was overly impacted by inventory revaluations in 2025, some of it which resolved itself in Q2 and led to the performance that you saw. It's not really driven by the business itself, it was more of the way we essentially take our standard cost variances through inventory and the balance sheet.

As I mentioned, we have switched some of our methodology on this one. So I expect a smoother quarter-over-quarter evolution in this one. The division that's primarily impacted by this one, especially last year, was BI&S, so Bearings & Industrial Solutions, first and foremost. And then PTC was probably the second strongest impact. So we'll see how Q2 unfolds. But if we did it right, we should have a much smoother quarter-over-quarter evolution.

Now we do have a seasonal business where plant loading is important to us and efficiencies are driven by the loading of our plants. So you should not expect Q1 and Q4 to be directly comparable, if I put aside some of the R&D and the customer negotiations impact.

But from a purely operational standpoint, Q1 and Q4, despite everything I've said before, will not be directly comparable. But again, smoother quarter-over-quarter is what we would like to see and what we're driving for in 2026.

I'm also a big believer that a better load, better operational steering of our plants drives throughout the year drives higher efficiencies and higher performance overall. So let's see what Q2 gives us. But again, I'm on the optimistic side on this one.

Division others, as you know, it's a mix for us of activities we're ramping up, ramping down. So the humanoid piece is in there, our defense efforts are in there, hydrogen is in there, so are some of the businesses that we are disposing off. So the comparison year-over-year is a little bit tricky. But if you use what you're seeing right now, you probably will not be off from what we should see in 2026. But that one is especially tricky, I guess, for you to model from the outside, unfortunately.

And it's a task for us to think about maybe for next year, whether we guide something on this or how we best do this. But as you said, it's a mixed bag of things that are ramping up and ramping down. And we understand the point. But for the time being, I think you have the guidance that you saw, and it needs to add up to the group guidance.

There are no more questions at this time. I would now like to turn the conference back over to Heiko Eber for any closing remarks. We have a last-minute registration from Klaus Ringel from ODDO BHF.

I wanted to ask on the Auto business. I mean it was quite nice to see the outperformance this quarter across different powertrains. And I would be interested in your view looking ahead, if we can expect to see such a nice outperformance or if you would expect also some seasonality in here?

Klaus, it's a good question, but I don't have a crystal ball, to be honest. With this environment, it's really difficult to mention that. To answer that question, what is quite interesting from my point of view, if you follow what's at the moment happening on E-Mobility, not only in Europe, but also in the U.S., you see what comes a little bit as a surprise to us that in particular in the U.S., people are buying e-cars, although the production side is more going in the other direction.

That may have to do with the fact that people look for fuel economy in a situation where [ ethylene ] becomes more important. We don't know yet. The trend is not stable. You also saw what happened here in Germany, what happened in France with more E-Mobility support. There are the obstacles with the loading infrastructure.

For me, what is really most important is that we have this hedge across the three different types. and that we can play these corresponding cubes well. So I can't tell you what Q2 is going to look like. What I can tell you is that our focus on playing in this space from E-Mobility to PTC in a clever and smart way to utilize the opportunities that are there quarter-by-quarter. That's the game plan.

And for sure, our biggest challenge is to deliver on our E-Mobility promise. And there, if outperformance helps there, I would expect that we probably see a continuation during the year. How this unfolds quarter-by-quarter remains to be seen.

A critical element will be the China angle of this. And maybe I can leave you with the following information. My colleague or our colleague, Thomas Stierle, is spending more time in China than any other colleague that we have.

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

Thank you very much. So first of all, thanks to our speakers. Thanks to my CEO, my CFO. Thanks to all of you for your continued interest. And as always, a big thank you to the team for the preparation. If there are more questions, please feel free to give us a call, happy to help. And with this, thank you very much. Have a good rest of the day and talk to you soon.

Ladies and gentlemen, the conference is now over, and you may now disconnect your lines. Goodbye.

Ladies and gentlemen, welcome to the Schaeffler AG Pre-Close Call Q1 2026. I'm Sargen, the Chorus Call operator. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Heiko Eber, Head of Investor Relations. Please go ahead, sir.

Thank you very much. Good morning, ladies and gentlemen. I'm very happy to welcome you to our today's pre-close call on the quarter 1 2026.

Now before we move to the content of today's call, I'm sure that, as usual, you have all taken notice of the well-known disclaimer. Please note that this release and all the information herein is still unaudited and that our next quiet period will start today after this call. We are holding this call to remind you of relevant public information previously provided by Schaeffler or otherwise available in the market, which may be helpful in assessing the company's financial performance ahead of the Q1 2026 results on May 5.

Looking at the agenda, as usual, I will guide you through the key messages and give some more clarity on our divisions. And as usual, you will have the opportunity to ask questions after our short presentation.

So Slide #3. Before we actually jump into the key aspects of Q1 2026, please let me upfront share some key messages around the Middle East conflict since I am very sure that you will ask anyhow. So we installed a task force evaluating this very dynamic situation on a day-by-day basis. Our footprint, nevertheless, in the Middle East is very limited to an office and a very small warehouse for our Vehicle Lifetime Solutions division. As of now, energy supply for our operations is secured and short-term price fluctuations are largely mitigated throughout 2026 by price hedging.

Our supply chains remain stable and no disruptions have been reported at any of our plants so far. Nevertheless, due to the elevated volatility, we are closely monitoring the situation. Q1 was not materially impacted by the conflict and the call-offs from our customers overall have been stable. Any inflationary effects on energy, freight and material costs are monitored and as in the past, will be addressed accordingly.

So now let's talk about Q1 2026. We expect sales in Q1 to be slightly lower year-over-year with a slight positive FX adjusted growth. On the EBIT side, Q1 adjusted EBIT should come in slightly higher than Q1 2025, and with this well within our full year guidance range of 3.5% to 5.5%, driven by a steadily improving operational performance. Regarding our free cash flow, we anticipate a negative figure in Q1, lower than prior year and following the usual seasonality. However, also here, we are well on track to reach our full year free cash flow guidance of EUR 100 million to EUR 300 million positive.

Now on Slide 4, you find the Q1 2025 sales and EBIT margin figures by divisions, including some comments to the respective market, sales and EBIT margin development in Q1 '26. Let's start with E-Mobility. The market environment in Q1 was rather soft in the U.S. I would describe it as moderate in China after the tax credits and the subsidies have been cut, whereas we could see an improving trend in Europe.

All in all, higher sales year-on-year, leading to a mid-single-digit FX adjusted growth versus prior year, mainly driven, as already indicated, by higher sales in Europe and Asia Pacific. When talking about profitability, we were able to further improve our EBIT year-over-year. Hence, the margin will be below our full year guidance range, but also this following the usual seasonality that you know from the previous years.

Looking at Powertrain & Chassis, we are still facing a soft market environment, in particular, in Europe and China. So this you have heard over the previous quarters again and again. It leads to a moderate sales decline in Q1 year-over-year with slightly negative FX-adjusted sales growth. But please keep in mind, this development is still linked to our strategic decision to phase out certain businesses. On the profitability side, we expect a strong Q1 with margin levels at the upper half of our full year guidance range of 10% to 12%. Still, the margin will be below the very strong Q1 2025 of 12.4%, but this still is clearly a proof point of the successful execution of the structural measures in the last quarters and years.

Taking a look at Vehicle Lifetime Solutions, we saw a stable demand in all regions as the car parc is further growing and aging. Q1 sales are higher than prior year with slight FX adjusted growth year-over-year on very tough comps. The Q1 EBIT margin is expected to be again very strong on prior year level. So really another stellar quarter for our strong Vehicle Lifetime Solutions business.

Last but not least, on Bearings & Industrial Solutions. The market environment continues to be difficult, still lacking a material recovery of industrial production. So I'm not going to tell you anymore that we are waiting for a market recovery. For now, we accept the market the way it is. Nevertheless, in China, we saw some strong positive momentum in several industrial sectors, including raw materials, railway, power transmission or industrial automation. In addition, the already addressed positive development in aerospace also continued.

So sales are expected to be slightly lower year-over-year, but with positive FX-adjusted growth supported, as already mentioned, by Greater China. The margin should be slightly lower than prior year due to the very high comps from last year. However, at the upper end of our full year guidance range of 7% to 9%. So strong operational steering and successful execution of our structural measures continue to pay off in Bearings.

On Slide #5, you see our well-known full year guidance, which we anticipate meeting across all key metrics. For sure, always with hindsight to the geopolitical tensions, in particular, the already mentioned situation in the Middle East. So before we jump into the Q&A session, just one short notice. After the call, as usual, we will distribute our consensus sheet and would be very grateful for your contribution and your estimates and even more grateful for your estimates until Thursday end of business.

But now let me hand over back to the operator for our first question.

[Operator Instructions] And with the first question coming from Christoph Laskawi from Deutsche Bank.

Just 2 quick ones from me. The first one would be, again, it looks to be a decent start for you guys in Q1. Should we expect the usual seasonality with a strong Q1 and then the margin to fade a bit in the coming quarters?

And then did management in recent meetings or conferences comment in any way on changes of call-off patterns towards the end of the quarter in terms of volumes or programs? Any changes there that have been highlighted?

Thanks, Christoph. So I guess we have learned our lessons, and we don't want to continue the usual pattern of having this very cyclic profitability development over the quarters. There will be slight deviations quarter-over-quarter. We will see, of course, potentially impacts from whatever is happening around the world at the moment.

But we are confident that these extreme peaks will not reiterate. On the call-off patterns, I mean, for now, the call-offs from our customers remained on a comparable level as we have seen in the last 2 or 3 quarters. The general direction of our customers, unfortunately, also remains the same. So the visibility that we get from our customers is reduced. You have a very good and reasonable visibility on the next 4 to 6 weeks, which is important for the short-term steering of your plant loading. The mid- and longer-term visibility is -- remains reduced. So customers reserve the right to also react quickly on what is happening. And we need to deal with it. But honestly speaking, I think the organization is getting better and better to deal with this uncertainty.

The next question comes from Horst Schneider from Bank of America.

Just quickly, some questions. Number one, do you expect or should we assume any larger one-off items again for Q1? It's always a little bit of surprise box, either write-down, but also on the cash side. Was there any cash out included in the Q1 already for restructuring?

Number two, it's a follow-up basically on this call-off question from Christoph as well. What we see now, for example, in VLS what is the region for the strong margin? Is it more seasonal? Or is it now really a situation that basically people repair their car and they don't buy any more cars. So that is a trend that I could expect happens in the next few quarters when the unit sales come down, then usually VLS is doing strong.

And again, on the call of maybe more by segment and how we should think about that. So when we are running now into an environment where maybe the EVs get a boost because of the high oil price and the total cost of ownership of EV is a lot better. So that could mean that maybe EV has got a stronger performance versus the ICE business maybe suffers. I always ask myself, then for Schaeffler, what does that mean? What is the better effect? I mean in E-Mobility, maybe you have got lower losses. But of course, PTC has got the strongest margin. So what should we think about this trade-off between potentially better E-Mobility versus lower PTC? What is better for you? Or it doesn't matter because you are kind of powertrain agnostic by now?

Thank you very much. No, very good questions. Let's start with the first one on the one-off items. You will rarely find any quarter with basically no one-offs. But in Q1, we didn't have similar significant one-offs as we have experienced over the last 1 or 2 years. So there has been on the EBIT side, no significant one-off in Q1. On the cash flow side, of course, our restructuring activities, they continue. So we have a constant cash outflow for restructuring. We have a constant cash outflow for the integration of Vitesco and basically making the synergies available. So that continues, and you will have a, let's say, normalized level of cash outflows for those 2 effects.

On VLS, honestly speaking, we don't yet see a significant pickup on the total number of repair kits that have been ordered. So maybe too early to say that people are tending to repair the car instead of buying new cars. What we see is that the regional and the mix effect was favorable in Q1. What we have seen is that we have a seasonalized, let's say, adjustment of our price lines, which has led in the first quarter maybe to the one or the other customer that did hold back some of the orders until these negotiations are finalized.

But overall, as we see the margin at the moment, it's just a very stable and at the end of the day, very profitable business for us. The third question, I like a lot because it's, of course, a little bit looking into the crystal ball. To be honest, we should not get distracted from news that we see in German newspapers. In Germany, the discussion around groups, I been to the gas station and I was shocked about the high gas prices, and that's why I'm now going to buy an EV. This is a very, very local phenomenon.

It shocks me too.

Yes. I tell you since years to have an EV.

I have an EV.

So of course, it helps. It is a kind of eye-opening moment for the one or the other car buyer. Will it structurally change the volume expectation for this year globally? Honestly, I would be careful to already anticipate something like this. In general, you already described the situation for us very well.

We are fairly agnostic. You will never have a one-to-one replacement. This is better than the other. At the end, what we need -- the best for us is if we have a decent development on E-Mobility, not much skyrocketing because that also creates then again, friction in ramping up projects. So a moderate growth in E-Mobility, a steady improvement of the margin and still enjoying a reasonable high ICE business, that would be the ideal world for us.

Okay. And on E-Mobility, last one, you are still in negotiations with your OEM customers on reimbursements. I think there was -- was there anything major in Q1 that was already booked? Or what is potential that this could basically beef up the margin then in the rest of the year?

So in Q1, there was no big onetime compensation from the customer. I mean negotiations are, of course, ongoing, especially and that's not a surprise with customers from North America. At the end, it's always a question, do you want to have a short-term compensation? Or do you want to have a long-term business? And to be honest, the truth will be somewhere in the middle. For some of the projects, you will get reimbursed. For some of the projects, we will be glad to accept, for example, hybrid business, securing our long-term supply relationship with these customers.

The next question comes from Vanessa Jeffriess from Jefferies.

I was just wondering if you could go into E-Mobility growth in a little bit more detail by region. I just mid-single-digit FX-adjusted growth is actually a pretty good outcome given the environment. So maybe you could talk about exactly -- I mean, if you could put numbers to the U.S. and China, that would be helpful.

Yes. Vanessa, for a breakdown by region, I need to ask you for your patience until we finally release the Q1 numbers. I mean the overall trend, what we have seen is that the ramp-ups that we addressed over the last quarterly calls on a regular basis, they are starting to materialize. That's what we especially see in Europe. That's why we said in China, let's say, the market is moderate for us that the growth is doing okay because despite the fact that the market is somehow muted due to the runout of some of the subsidies.

We get our new projects into series production. And Americas, we are in a situation where we are basically shifting from an originally estimated ramp-up of battery electric vehicles towards now an accelerated ramp-up of plug-in hybrid and range extender models.

Okay. And then maybe if you could give us any update on your other activities in the first quarter?

Yes. I mean the -- let's call it, new growth activities, we are not standing still. A there. Next week, there is the Hannover fair, one of the biggest trade fairs in Europe. And please accept that we will save the one or the other announcement for the trade fair next week. So bear with us, come and see us in Hannover, and I promise we will have the one or the other good news to share on new growth.

But what I can say is that the business is doing what they are supposed to do. We are increasingly increasing our engagement with more and more customers. We are very successful in acquiring new partners. And we have to be, to a certain extent, selective on how many supply relationships you really want to have at that point in time because it's not just counting the numbers of customers that you are serving, but it's about serving the customer right and building this long-term relationship.

[Operator Instructions] Now I have a question from Ross MacDonald from Citi.

I think most of my questions have been answered, but I still have 2 left.

First one on the E-Mob business. Obviously, your slides are very helpful. But just as we think about where the margin may settle in Q1 and then how to model this sequentially through the rest of the year, is there any steer you can give us? Obviously, you're outside the guidance corridor in Q1, but would you envisage the E-Mob margins in the guidance corridor in Q2 and then sequentially improving through to the back half?

The next question, just to follow up on the other divisions. Obviously, that was a slight drag, I think, EUR 28 million loss in Q1 last year. Could you maybe help us size the losses in that other division? I assume losses in that other division in Q1 '26. And then maybe a final one, just on restructuring on Horst's question. How should we think within this margin because obviously, the margin guide here is strong versus the consensus in Q1. How should we think about the P&L benefit that carries over this year from the restructuring you've done already? Is there a base level of P&L or margin uplift as it relates to the headcount reductions that we should think about as a base level year-over-year sort of improvement?

Yes. Thank you, Ross. So on E-Mob, I would say that the margin development last year was already a good indication on how the seasonality could look like. We have typically a very strong Q4. That's what you know from the last years, very much linked to the reimbursements that we received in the fourth quarter. On the overall full year guidance, so we are still confident that with everything we see that the full year guidance is realistic. And again, if you just take 2025 as a kind of blueprint on how the improvement should show up over the year, I think that's a good indication.

On the others, yes, of course, you will see a small loss on the others division also in Q1. It is on a lower base than what we have seen last year. Still, we are talking about either business that is in a start-up phase or business that is in a phaseout phase. So let's say, mitigated losses, but this is not meant to be the big profit contributor for now.

And last but not least, on the restructuring effects. I mean, at the end of it, what I mentioned at the beginning, this improvement year-over-year on the margin side, the stabilization that we especially see on our B&IS business over the last 12, 15 months. This is, of course, heavily supported by the restructuring. It's always difficult in a bridge to say, okay, which amount or which part of the improvement is coming from restructuring. But what we see is we have a headcount that is steadily decreasing in line with our original projections.

On some of the divisions, we see that -- and I guess Klaus Rosenfeld mentioned this in our last quarterly call, in our full year call, we are seeing that we are ahead of our original schedule. So I guess, restructuring, well on track, integration well on track and the positive effects from both will continue to contribute on our steady margin increase.

The next question comes from Sanjay Bhagwani from Citi.

I've just got one question left. Maybe, Heiko, just a bigger picture on Q2. If my memory serves, last year, Q2 was impacted by tariffs and some of the pass-through nuances and the timing, and that is why the margins have declined sequentially. So if this year, the call-off volatility, let's say, remains where it is now, then would you expect the Q2 margins to be higher versus Q2 last year?

Thanks, Sanjay. So in the pre-close call for Q1 to already make an indication on Q2 is, of course, not an easy one. But let's put it like this. Last year, you're right. We had a little bit of hiccup due to the tariff situation and all the implications on the supply chain. If this is not the case, then we expect a more stable Q2, and that would mean that we should see a continuous positive development on the margin side year-over-year also in the second quarter.

We have a follow-up question coming from Horst Schneider from Bank of America.

Just quickly, I was searching that yesterday on Helsing, you signed the MOU in December, but there has not yet been a final contract, right? Or was there something in March, maybe of the full year numbers? No, not yet?

This is correct, Horst. But I mean, keep in mind, this is not so much depending on Helsing or us. This is very much depending on the governmental side of things. So they need to get their act together and then the operational can continue to do the work.

So first, Helsing needs to get the official contract and then you can sign the contracts with Helsing, right?

That would be the logical sequence.

The next question comes from Tobias Willems from LBBW.

A quick question from my side. The market for e-cars remains tight this year. And the margin in the e-business is expected to improve in regard to the full year guidance given from your management. Is an improvement in production capacity utilization to be expected here, irrespectively to the restructuring measures you take -- you did already take in place?

Thanks, Tobias. No, I mean, at the end, it's -- number one, we see continuous growth in E-Mobility, which is good and which is needed. It helps us to better utilize our line capacity. We have many of these growth opportunities in our own hands. We talked about the number of launches we have in front of us this year. And of course, the smoother the launches will go, the better for the top line, but also the better for our bottom line since in a complex launch, if you can mitigate your ramp-up costs, that is helpful for the margin.

There, we are confident that we are steadily improving. So the focus of the team of Thomas Stierle is very much on having these launches as smooth as possible. And the indications we get at the moment are positive. And you also addressed already another important topic. I think we made it quite clear. A significant part of the synergies from the merger between Schaeffler and Vitesco is also contributed -- or is contributing to E-Mobility. And there, we are progressing according to plan. So at the end, it's a mix. It will be better loading of the plants. It's smoother launches for the new projects and it's efficiency gains on R&D, on overhead structures. So that's why, all in all, on track for the improvement for this year.

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

Thank you very much. So as usual, thanks for your interest. Thanks for your time. A big thank you already now for helping us with the consensus. And as usual, a big thank you to my team for the excellent preparation. So have a nice rest of the day. Talk to you soon. Take good care. Bye-bye.

Ladies and gentlemen, the conference is now over, and you may now disconnect your lines. Goodbye.

Ladies and gentlemen, welcome to the Annual Analyst and Investor Conference 2025. I'm Moritz, the Chorus Call operator. [Operator Instructions] and the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Heiko Eber, Head of Investor Relations. Please go ahead, sir.

Thank you very much. Ladies and gentlemen, I'm very happy to welcome you to our today's call on Schaeffler's financial results Q4 and fiscal year 2025. Press release, following presentation and our annual report have been published today at 8 a.m. CET on our Investor Relations home page. And for sure, we will provide the recording and the transcript of this webcast after the call.

As a quick reminder, please note that all figures for 2024 are pro forma figures unless they are marked separately as reported figures and the mentioned pro forma figures 2024 and related information are unaudited.

As always, Klaus Rosenfeld, our CEO; and Christophe Hannequin, our CFO, have joined the conference to guide you through the key information in our presentation. And afterwards both gentlemen will be available for our Q&A session.

And now let me hand over to our CEO, Klaus, please.

Thank you very much, Heiko. Ladies and gentlemen, welcome to our full year 2025 call. You all received the numbers and the presentation this morning, and I would immediately jump on Page 4, the overview with the key messages on the numbers. We titled it with resilient performance in an increasingly volatile and challenging environment. And when this title was chosen, ladies and gentlemen, we were not aware of the attack of the U.S., Israel and Iran.

So let me -- before I come to the numbers quickly, preempt some of your questions in terms of what's going on there, what does it mean for Schaeffler and how do we think about this? 3 points there. The first one is our presence in the region is very limited. We have no production there. We have no bigger operations there. We have a small warehouse and some people in Dubai. But as such, there is very limited risk to our assets and operations. Second point is, clearly, the key thing to watch out for is supply chain. You all know that a significant part of the trade that comes from Asia Pacific and China to Europe is channeled through the Suez Canal, not through the Strait of Hormuz, but the Suez Canal. If that would be closed, if that would be impacted, that can have an impact.

We see that freight rates are increasing. That's certainly not a surprise. We also have immediately activated our risk management systems and think we are at the moment, unaffected, I shouldn't say, on the safe side. But what can happen if this extends, if this takes longer than expected, then for sure, there could be a supply chain situation where containers need longer, ships would go around the Horn of Africa. We have seen that before. This is a situation that we can manage and that as we see it today, will not have any significant impact on our business as we assess it so far.

The third thing is that energy prices, we are a company that produces. So energy is important. Our main source of energy is electricity and gas, 2/3, 1/3. We buy energy in a middle 3-digit million euro amount per annum. To date, around 75% of that is hedged for at least 12 months. So the exposure there is small. We are rolling out on a regular basis. So if we would see increases there, the impact on our business should be manageable as well. And that's also my overall -- my overall message here to you.

The situation is clearly unfortunate. No one expected something like this. We have seen geopolitical risk on and off. We can only hope that this comes to a quick and hopefully less damaging situation. But we think the immediate impact that we can see from this on Schaeffler is rather small and in any case, manageable.

Back to the numbers, 2025. Sales slightly below previous year on a pro forma basis, EUR 23.5 billion. The interesting number on this page is gross margin. What you see here is not the reported gross margin, but a gross margin that we adjusted. The reported number is 18.4%, but it includes compared to last year, one-off losses from the depreciation of SAP licenses. You know that from the previous quarter reporting impairment losses on some intangible assets that relate to a previous acquisition that we wrote off and also market-driven capacity adjustments in E-Mobility in Americas. When I adjust for this, I think that's the important message here.

You can see that the main health indicator of our business has improved from 19.1% to 19.9%. And that's definitely on the positive side. I watch, in particular, the gross margin development because I see it as a base for improving our profitability. And Chris is going to explain to you in more detail where this is coming from, but improvement in the production cost is here the main driver, and that shows that our restructuring measures of the past clearly pay off. 4% margin. Overall, it's an improvement of nearly EUR 100 million compared to previous year, again, on a pro forma basis.

Free cash flow better than expected, and that's driven by the profitability, but also by the very disciplined capital allocation that we are known for, EUR 266 million is also the main driver why we said let's more or less leave the dividend where it is with EUR 0.25 to EUR 0.30. That is what we are proposing to the Annual General Meeting.

When you judge the year, you have highlights and low lights. I'm not going to read that all to you to in the interest of more time for question and answers. But you know our hedge model. It certainly becomes even more relevant in such an environment. You know that we are diversification positive. You also know that we are a company that has always said we need to do -- we need to act ambidextrous with self-help measures on the one hand, but also growth opportunities on the other hand.

This table shows that we are on both sides, making progress. The integration is on track, and we will continue, as we promised to you, to optimize our business portfolio. The sale of the Turbocharger business in China and also the closure of Schaeffler Ultra Precision Drives in Germany are just testimony of that.

Geopolitical risk, I don't need to comment on this. The macroeconomic environment is also not the easiest one. And for sure, we have headwinds in E-Mobility that we need to tackle. We have been brave enough to show you 2 divisions here and to expose ourselves also to this 2028 breakeven challenge, I think -- still think that that's the right way to go. We are confident that we can make that. And the trajectory to get there is certainly something that is not just linear.

If you go to the next page, 2026, I don't need to read that to you. I just said this, but we are in line with the guidance for 2025. That was, as you remember, increase for free cash flow. That's the area where we also are better than expected. And for sure, free cash flow depends on lots of various factors in the fourth quarter that have resulted in this higher achievement. I can already say here, this is not the result of pulling free cash flow forward into the year 2025. The opposite is true. We managed it towards the end of the year very carefully going forward.

Page 8 is the sales growth also here. I don't want to go into too much detail. What you see in detail -- what you see here is the flattish growth comes from a variety of different movements, Vehicle Lifetime Solutions up; Bearings & Industrial Solutions, slightly up; Powertrain & Chassis down. You would not be -- you would be surprised if that would not be the case also with the things that we have sold and then E-Mobility plus 7%. One thing here is standing out, that's the negative performance in China and the positive performance in Asia Pacific.

That's not just market. That also has to do with the fact that one of our largest platforms, the EMR3 and EMR 4 platform for a customer called Hyundai. The customer has moved this from a Greater China operation to a Korea operation. That explains why Greater China is 2 digit down and Asia Pacific is 2 digit up. The old program runs off and the new program is growth in Asia Pacific.

Page #9, outperformance by powertrain type. Nothing that you should be surprised about. This is just a continuation of what you saw in previous quarters. We are outgrowing the market in terms of E-Mobility or, let's call it, battery electric vehicles, plus 13%, while the other 2 powertrain types are lower than the market. You also see order intake promising battery electric vehicle for the full year, EUR 2 billion additional order intake over sales of EUR 1.6 billion gives you a 1.3x book-to-bill also going well.

And ICE, certainly as expected with a book-to-bill ratio below 1. That is a picture that from our point of view, shows again why it is important to have the hedges in place and why we think and why we are confident to make our targets in both divisions.

Now I will go to the next pages, Heiko, very briefly because most of them are there for you reading it. I've already mentioned the key messages. Page 10 shows your E-Mobility, good sales growth, strong order intake and further gross margin improvement. That's the key message here, and you see it in the numbers. And for sure, that's a good starting point for the 2026 rate.

Powertrain & Chassis, the key number here is we are able, although sales were not growing, and that has to some extent to do with the phaseout of certain portfolio elements. Gross margin kept at a high level, even improved by nearly 1 percentage points. Order intake, particularly driven by hybrid, that I think is also a quite remarkable result for the year 2025.

Then our shining star Vehicle Lifetime Solutions, continued growth, strong profit margin, good fourth quarter, nearly everything in the same ballpark like 2024. So that business sits really very well and also projects positive development going forward. And on Bearings & Industrial Solutions, you remember a year ago, we had to look at this very differently, had to push several [ roles ] to bring this forward. And now we see the first results from this.

Sales growth positive outperformance, certainly not yet there, book-to-bill 1:1 -- 1x and the gross margin that is slightly below. We are fully aware that there is further room for improvement. And when Chris is going to show you free cash flow, you will see that Sascha has done a lot here to bring the free cash flow generation of this business back on track.

Now 14, you've heard so much about new growth and what we're doing there that I will really cut the short. You saw the latest news yesterday on this partnership with the Chinese company. That's #3. Leju Robotics is a bigger player in the OEM humanoid space in China, probably #3, very experienced. It's interesting for us because they are asking for the full suite of products, not only just some ball screws, ball bearings, but also sophisticated actuators that really points in the right direction, and we are proud now that we can complement our European activities with Neura and Humanoid with a premier player in China.

If you go to this page and look at the last bullet point on the left-hand side, this is something that we have not marketed today with a press release, but that has happened this morning. We have opened an innovative humanoid lighthouse factory. It's an innovation factory. It's not just production. It is a one-on-one or end-to-end structure where you can innovate not only products, but also production processes, very much integrated, high sophistication, data-driven super partners with NVIDIA and Siemens, everyone excited there and clearly, another sign that this humanoid ecosystem will take off and Schaeffler will play an important part in that, both in the various markets where we are active.

So I think the key message is the activities are gaining traction. There's still a way to go for sure. You don't see this in the results at the moment, but we are absolutely positive on that development. What we have seen in the last months is much better than what we expected in September 2025 when we started these to market these activities.

Same holds true for defense. Yes, this is a much shorter period since we started this. We are in the second phase of our program here that ends on the end of March. And again, I would have not expected when we started this, Chris, that we would see first orders coming in. Some of you heard that Helsing got the approval for their drone contracts from the German government.

So we are only waiting for the next days to come to sign our first supply contract with a player here achieved in record time, and there's definitely more to come. We are very well positioned to grow in the defense sectors. Yesterday, just one example, we had Lakestar with 2 handful of defense players with us here in Herzogenaurach to see what we can do and the interest is overwhelming.

I would also like to add, I've done this in the press, one more area that is interesting, certainly something that is more sophisticated and a new area, but very much linked to defense, and that's the space area. Again, not just announcement, but something where we look very carefully into product opportunities. What you see here on this little page, and I'm not going to go into more detail, is a reaction wheel. Every satellite, whether it's for civil or military purposes, needs these reaction wheels.

It's exactly something we can do, consists of motors, consists of bearings, it needs a system, it needs power electronics. And we are already starting conversations with major players here to see whether that growth potential opens up new growth opportunities for us.

This is the growth side. I already said this. We look at this from -- with an ambidextrous mindset. You cannot only do offensive, you need to do defensive as well. And I'm proud to say on Page 15 that our performance program is not only on track, but is in implementation faster than expected. Just to put some numbers behind this, EBIT promised as an improvement for 2029, 100% achievement rate was EUR 815 million, most of that from synergies, the other part is from additional structure measures.

And I can say with the number in 2024 and what we achieved in 2025, we are nearly 40% there in terms of impact already in the numbers. And if you sort of do that math in a similar way for the headcount reduction, we promised 4,700, of which 2,206 or 47% have already left the company and another nearly 30% are contracted. So it's fair to say that as of today, we are 76% there, while some people still have to leave the P&L and the company, the remaining 24% should be doable. And I'm -- I dare to say that we are able to deliver that program at least a year earlier than expected.

What gives us confidence here is that all the negotiations with workers' council have been successfully completed. The number of plants that we are closing has even increased with 2 more German plants and that gives a lot of positive hope that we are able not only to deliver on the growth side, but also in further improving our cost side.

Capital allocation, Page 16, nothing really surprising. We invested nearly EUR 1 million, 0.6x depreciation. Capital employed came down by EUR 500 million in the fourth quarter. And you see that, that is allocated, as you would expect, onetime depreciation in E-Mobility, certainly lower in PTC and B&IS, small at 0.5x. That has to do also with investments into logistics operations and B&IS also a very capital-conscious type of investment. I'll leave that for your questions and hand over to Chris for the further explanations on the financial performance.

Thank you very much, Klaus. I'll take you through the full year sales, EBIT, free cash flow. We'll talk briefly about the dividend. But before we jump into it, maybe one comment on quarter 4, which is not in the slide deck here, but it's noticeably better than quarter 4 from the prior year, which was a complicated one, as you all know, with positive growth of 1.6% during Q4. A gross profit margin once you adjust it for the one-off effects related to the impairments of some E-Mobility topics in North America, once you correct it for the other impacts that we had in gross profit is essentially 2% -- 2 points of gross margin above the prior year at 19.6% overhead under control.

And EBIT, which is almost twice as much as the one from 2024 Q4. Keep in mind, when you look at all numbers, Schaeffler, and Schaeffler and Vitesco combined is not a group where you have a steady EBIT generation throughout the year. Our quarters because of the activities behind them, because of the industrial setup in some of our divisions has different physionomy quarter-over-quarter-over-quarter.

So what I take away from quarter 4 2025 was a solid one given the physionomy of our P&L and for sure, significantly better than the prior year. CapEx was also held in check at EUR 275 million during the last quarter and cash flow was substantially positive, as you can see in the full year numbers.

Now if I go back to the flow of our presentation, and again, not reading for every number on the slides, but if you look at the sales and gross profit, adjusted for FX, we are more or less stable year-over-year, even more so when you correct for the fact that we have divested some buildings -- businesses towards the end of the year. EBIT profit adjusted goes up by almost 1 full point. You can see that on the top right.

If I give a little bit of flavor on the biggest contributor, which is the production cost bar that you see there, essentially our performance improvement and where we visualize most of our structural improvements as well. So EUR 281 million additional. If I bring it back to divisions, the 2 biggest contributors would be E-Mobility by EUR 117 million, which is, again, the proof point that scaling up and being efficient and being efficient in launches in E-Mobility works.

And then B&IS, EUR 185 million additional contribution from performance and restructuring. A little bit of noise around it. Obviously, some costs related to our restructuring program as you see in the EUR 153 million on the right side with program forward for EUR 78 million. And the other point of note is our sensitivity to foreign exchange, where at gross profit level, you see that the evolution last year cost us EUR 168 million to EUR 68 million.

Maybe one last comment on our price policy or our price achievements. The EUR 33 million that you see at the beginning is positively impacted by E-Mobility, which makes sense when you think about the messages around improving program quality and business quality in VLS, which is an even bigger achievement given the context that they operated in. PTC and B&IS are almost neutral to slightly negative, mostly due to the mix between our products.

If I move on to the EBIT slide, we continue with, again, the same logic. So the significantly improved gross profit contribution. Some -- again, I apologize about that, but some noise still in our numbers in R&D and SG&A as we book restructuring costs and integration expenses, especially in SG&A.

On the R&D side, the only point of note above what I've just said is a slightly lower amount of R&D capitalization year-over-year. So it shows as a negative, but it's not per se a negative message. On the blue, EUR 101 million, you see the cancellation since we're talking about EBIT BSI (sic) [ B&IS ] you see the cancellation of the items that are located on the left and that have not been adjusted yet to gross profit. So all in all, a solid 0.5x worth of additional EBIT year-over-year, even though the readability again of our financials is still impacted by the many transformations that we have going on in the company.

Going quickly through E-Mobility and Klaus already spoke to some of it. So I will be very quick with 7% growth on the sales side, coupled with a very nice 6.1%. Yes, we still in the negative zone, but moving from minus 22% to minus 16%, mainly pulled by our business units around E-Drives and Controls. And if I was to take a regional angle in all regions as they go through the different launches of different programs, the business is growing and is growing in a more profitable way. What is still missing again is the scale. That's part of the road map as discussed many times.

On PTC, slightly -- slight decline in sales as expected, also impacted by some of the sales of businesses towards the end of the year. Almost stable at EBIT level, EBIT [ BSI ] again, I qualify that as a fairly strong sense of resilience in that business where they are absolutely focusing on operating cost and operational performance. If you think back about the EBIT bridge, we find some of it.

VLS, it's boring to say this, but continues to be the success story that has been so far with another 5% growth year-over-year at the very high level of 14.8%, almost 15% EBIT level. It's even more of an achievement when you look at the growth of the platform business, which although it's not the biggest part of the business, it is one of the strongest growth with plus 32% almost, and it carries slightly less gross profit margins than the rest of the business. So for them to hold stable means that they counteracted that mix effect elsewhere performance growth and pricing. So another solid year for VLS.

Bearings and Industrial, if we move to the slide, slight growth. What is more notable, again, is this combination of restructuring benefits and operational performance combining to deliver almost 1 point worth of additional contribution to the EBIT [ B&IS ] line. Some units within Bearings and Industrial, by the way, growing at double-digit rates, aerospace bearings in Europe and North America being one of them.

If we look at net income, still negative on a non-adjusted basis. If you adjust it for the special items, net income is positive at plus EUR 148 million, which is an important number for us. We are doing what's needed to restructure the business and drive performance. It has an impact on reported net income, but adjusted net income, again, is above the 0 line at EUR 148 million. No specific points to note on financial results. On the taxes side, we are impacted by write-downs of our deferred tax assets, and that takes us to the minus EUR 424 million that you have there.

We move on to free cash flow. Massive would be the objectives that comes to mind regarding the improvement year-over-year. We're a little bit careful with the reference for 2024 because we all know that there are some integration effects in there, but fundamentally almost EUR 1 billion additional cash flow year-over-year. As mentioned, we did take some steps during the year in order to safeguard our E-Mobility launches on one hand and our own business on the other hand and are carrying slightly elevated inventory levels in some businesses. And I say some businesses because on B&IS did a tremendous job in working down inventory levels.

But we chose, again, to invest a little bit in inventory in order to ensure that E-Mobility scales up properly and that we protect our customers against supply chain disruptions and next few years to semiconductors and rare earths tariffs. I mean you all know the story for 2025. This is not a permanent state of things and we get worked on in 2026 for sure, the following year. Contained spending on CapEx at EUR 974 million, so below the EUR 1 billion mark. None of the savings or none of the CapEx steering that was done has any impact on the future of our business. Said differently, we did not sacrifice future growth. We did not sacrifice opportunities.

We just manage CapEx extremely closely compared to the need and especially when it comes to E-Mobility ramp-up. So trying to avoid as much as possible to have capacity installed before it's truly needed, which, again, potentially protected us also a little bit against some of the swings in demand on the E-Mobility side in North America. We did have to take an impairment during the year, but compared to some of our competitors or some of our customers, the amounts are -- I'm not going to say minimal, but they are fairly consistent.

If we move on to our debt profile, you see the result of the 2 actions done during the year, the 2 issuance of bonds once during H1, the second one during Q4, both of them successful oversubscribed at very tight and favorable market conditions, which again puts us in the right position as we enter into 2026, where we have maturities that are completely manageable.

Net -- sorry, leverage ratio ended the year at 2.1x, slightly better than what we had planned and approaching the top range of our corridor that we set up in our midterm targets from 1.5x to 2.0x to say that we're satisfied about it. We, of course, will continue to aggressively work to bring that down, but progress is not visible there. Dividend proposal made to the Supervisory Board and accepted last week at 0.3%, underpinned by a healthy underlying free cash flow of slightly more than EUR 0.5 billion. It allows for us to do what needs to be done in order to be consistent our dividend policy and our dividend story over the years and share some of it with our shareholders. It's a EUR 0.05 increase, as you see over the previous year. And again, it's an integral part of our equity story as written there.

And that being said, I will hand back to Klaus, who will cover the guidance for 2026, which was published this morning.

Yes. Thank you, Chris. To finish this up, Page 29, full year '26 guidance. We titled it here on our way to achieving midterm targets 2028. That's our commitment. And there is, as of today, no reason to deviate from these targets. 2026 is a rather conservative guidance, but I think is absolutely prudent in the environment we are in. As I indicated before, the latest development starting over the weekend is certainly not included here. But in terms of market assumptions, you see what we base this guidance off.

If you read through this guidance, you see and take the midpoint of what this indicates here that we are rather flattish in terms of our sales activities. This includes what we always said, none of the new growth activities will have a meaningful impact on top line in 2026. And the rest, you can easily derive this from the 4 divisional guidances that we gave you is a question of mix, E-Mobility growing, Powertrain & Chassis, reducing vehicle lifetimes with some growth and also Bearings and Industrial Solutions that makes up the overall group situation.

EBIT margin, also here, when you see we take the midpoint, 4.5%, a slight improvement. And you see also the divisional ranges as well. For sure, yes, one of the key things that you may be concerned about is E-Mobility. We have said several times, this is not a linear curve. This is something that needs to build over time. And for sure, the year 2026 will be decisive. If you take the low end of this, yes, this could mean that in a worse situation, there is an EBIT that comes under pressure. But again, a range of the range. And what I just said, our ambition is to improve even in a situation where the markets don't allow for significant top line growth.

Free cash flow EUR 100 million to EUR 300 million is our commitment after EUR 266 million. That also indicates to you that we are committed here to strengthen our free cash flow generation that has historically been high and will continue to be our key focus going forward. So I think once again, this guidance is certainly rather conservative but prudent. I don't know what KI does with this, but I know that this is something we can deliver, and I can promise that we will do the utmost possible to deliver it for you.

Let me finish with my last page and share with you the top CEO priorities for Schaeffler. Certainly, the top #1 priority for us is further closing the gap to EBIT breakeven in E-Mobility while delivering the order book. The changes in the U.S. have an impact on the order book that has been, to some extent, delivered, to some extent adjusted, but it's in an overall number, still something that will allow us to grow that business going forward on secured business. The second one, as I said before, is to secure our operating performance by continuous self-help measures and portfolio optimization as promised in the Capital Markets Day. And I can tell you, we know how to do that. We have shown this over the years, and we'll continue here to be focused on how can we help ourselves to drive performance forward.

And then last but not least, we'll continue to invest and go forward in our main growth areas, humanoids, defense and space as a new one. You should all remember that we said several times, we are doing this by leveraging existing capabilities and competencies. These are not adventures. This is just an extension of our core business beyond the core, and I'm very optimistic that, that will pay off in the next years without impacting the P&L, both from the top line, but also from the cost side too much in 2026.

Let me finish with 31. After today, we will be available tomorrow for an analyst breakfast in a city roadshow. Heiko and myself will then go to the U.S., speak to investors there that have been very interested in our development, and we'll then continue with several roadshows in Europe until we all probably meet again at the Hannover Fair at our Hannover Fair Investor booth. AGM is on the 23rd of April here in Herzogenaurach. You are fully invited to participate if you are interested, and I close here and leave enough time for your Q&A. Thank you very much. Back to Heiko.

Thank you very much, Klaus. Thank you very much, Christophe. So since we have a number of colleagues already waiting in line, not to waste any time, let's directly hand over to the operator and take the first question.

[Operator Instructions] And the first question comes from Christoph Laskawi from Deutsche Bank.

A couple, if I may. The first to start with on PTC. So at midpoint, I think you guide down top line roughly by 7%. Could you just give an indication what part of that is just the phaseout business on noncore ramping down also that we saw within Vitesco? And how much do you see outside of that being a drag in '26?

And then also on PTC in Q4, the gross margin actually dropped, I think, by around 6 points quarter-over-quarter and 5 points year-over-year. Could you just highlight a bit why that happened? What was the main driver? And how we should think about that earlier in the year at the start of '26?

And then on E-Mobility, also on the gross margin, it's actually negative again in Q4, quite a drop versus Q3 and the performance we saw there. On an EBIT basis, obviously, you had a EUR 50 million positive in other probably offsetting part of that. Could you explain what drove the gross margin down? Was it impairments on customer programs or a bit more detail would be helpful there. And also how to think about compensation payments in '26 driving that margin?

And then just last point that I would have, you talked about order wins in defense and potentially in other like humanoids fields. Should we think about the order to sales time difference roughly being the same as for autos, meaning 2, 3 years? Or is it very different from that?

Okay, let me -- Christoph, let me start with the last one. Humanoid is different than defense and defense is different than space. I cannot, at the moment, confirm that the order to sales time is 2 to 3 years. Defense is a new ecosystem for us. If I take the Helsing contract as the first contract that we are close to sign, and that's a question of days, I think it's probably faster than 2 to 3 years. On humanoids, we have gathering interest into prototypes. Prototypes are naturally different than large-sized orders. There are from the large players more and more requests. How that unfolds is a function of how fast the application of humanoids is going to build up. So everything I would say here is a speculation. So let's leave it here.

The proven sort of situation also has to do with how that offer to order process works. And I would assume that in the 2 new growth areas, it's different. We need to come back to you with something that is reliable, but 2 to 3 years as a sort of rule of thumb needs to be further analyzed and then we come back. In E-Mob, yes, you observed correctly that Q4 had a drop in gross profit margin. And that's basically what I explained at the very beginning. You have 3 main items in gross profit margin that also go across the businesses. The most important one for E-Mobility is the market-driven capacity adjustment, E-Mobility in Americas.

As Chris explained, we took a one-off impact here that did not just went through the overhead, but through gross profit because we basically wrote off certain contracts and that is the main explanation on E-Mobility. And that -- you say it again.

EUR 126 million.

EUR 126 million. You add that back and see that adjusted figure. It explains more than the reduction. And you also have, to some extent, a proportionate impact from the other one-off losses that went through gross profit. And again, that's a little bit unusual, but it has to do with the way how you depreciate SAP licenses and also impair intangible assets. So that's the main explanation on the E-Mobility side. The health indicator here also after these adjustments points into the right direction.

For PTC, I hand over to Chris.

For PTC, the main impact, it's actually the impairment that we look on part of our Chassis business. There's an EUR 100 million impairment that was put to the books during Q4, impacting the gross profit on PTC in Q4 2025. If you correct it for it, it's -- you are at a gross profit of 21%, which is slightly below the Q3 number of EUR 23.6%, but nothing of concern, again, when you take into account the annual profile of our results. So yes, there is a one-off in Q4, which I think is what you're seeing, but nothing structural as to the profitability of PTC.

Then the next question comes from José Asumendi from JPMorgan.

Just a few questions, please. Klaus, can you talk a little bit about the -- how the company reacts to the current volatile environment? Which levers are you pulling to monitor risk, demand, volatility in raw materials and a little bit from the lessons learned over the last cycles?

Second, on PTC, again, I would love to hear a bit more the confidence you have to deliver above 10% margins. I think part of that was already explained through the Q4 one-offs that you mentioned. Maybe you could just speak a bit more about PTC and how you sustain that 10% to 12% margin range in '26?

And then finally, whether we should we thinking about any exceptional price recoveries in 2026, which could help the business overall in any of the given 4 divisions?

Okay. Let me start with the last one, exceptional price compensation. I think we have done quite well in 2025. When you think about tariffs, the tariff regime is under scrutiny, as everyone knows. What this means for us remains to be seen. We are observing very carefully what's happening there, whether you can recuperate anything there, but that's a wait-and-see position. It's premature to talk about numbers here.

As you all know, we have, I think, achieved and also been recognized for this from our customers as a very balanced approach. And I can say there is still a little bit of overhang from 2025 that will impact 2026. We have also agreed internally that we will continue with that program and see that we move forward when it comes to claims, but also certainly defending claims in our direction. It's an extra effort that is needed here, but it's, I think, time and energy well invested.

The first one, José, I didn't really understood, but I think you referred to the current situation and how we are reacting to this.

Yes, please. Exactly. Yes.

I can say the company has a proven risk management approach when we saw what happened Saturday morning, and there were already indications on Friday evening. We activated our risk management systems. The process has worked there. They started more or less immediately and came up with a first analysis on Sunday. How does it work? You basically involve in this situation, people from purchasing, from supply chain, from customer side, people from the region, people from outside the region, the sector intelligence and the outcome was what I just said.

For the time being, without knowing how this escalates further and hopefully, it does not, the situation for us based on the semantic risk analysis is manageable. I explained it upfront, both from the exposure we have in the region, from our supply chain risk, but also from the immediate cost risk. Our raw material is not depending on oil prices. We buy a variety of things. For sure, it's important that supply chains stay in place. And as it looks like, that's the case. So that's what I can say. We have seen geopolitical risk going off and on. And hopefully, this is also the case this time. Certainly not the best day to present numbers in such an environment, but we look across this. And for us, once again, it's most important that we deliver on our promises.

Chris, do you want to take the ones on PTC?

On PTC, I mean, I would point to 2 things. A, the -- once you remove the noise in the background on 2025 performance, they are essentially able to match dollar for dollar, euro for euro, the decrease in the top line -- on the bottom line. And we have some one-offs impact here and there. But part of the reason to believe for 2026 and the years after is, as E-Mobility takes a slightly longer course to deploy in some countries, it actually does pull a greater demand on our PTC production capabilities. So we are facing contract extensions. We are facing quotes on new businesses or extended businesses. So the ramp down on PTC is not necessarily as brutal in some regions as it was thought out to be, and the North America being the obvious example.

This gives us -- I guess, what I'm trying to say is this gives us the even more room to transition our organization from one side to the other from PTC to E-Mobility and manage the cost and the restructuring that comes with it. So as we said in our 2028 targets, we know how to deliver a 2028 vision based on performance improvement and restructuring that holds PTC stable. The recent evolution in the context gives a few more reasons to believe. I'm cautious when I say this because the offset of this, obviously, is on the E-Mobility side.

And the next question comes from Horst Schneider from Bank of America.

I want to dig deeper again into E-Mobility and Powertrain & Chassis, especially with regard to the midterm guidance. What I got from your presentation was that you said, especially for E-Mobility, the results are scale-related. So when I look at the midterm targets, it requires from here basically kind of 50% revenue increase, assuming that you meet the midpoint of your revenue guidance range in E-Mobility. So I just want to understand because we have seen that in '25, and we also -- I think we're going to see that in '26 that the top line growth is somewhat limited.

You say it's not linear, but therefore, what is -- my question is, what is the trigger that it starts growing a lot more in '27, '28? And if it doesn't, if there is no risk to the growth guidance, what actions do you take actually that you can make sure that the breakeven can be achieved? So does that mean now that we need to take into account maybe capacity adjustments, CapEx cuts also in E-Mobility? In a way, that question also holds true for Powertrain & Chassis where you think that -- or where you guide for midterm that from here, the revenue stays stable, but they are de facto declining. So how you stopped the revenue decline? I think if I remember back to the CMD, you said that the Chassis business is going to grow, but maybe you can give an update how here the revenue growth is developing and why the revenue should stop declining if the ICE penetration rates decline de facto in Europe.

Then on guidance 2026. Because in automotive, you guide for kind of flat automotive production, but you do not rule out that the revenues decline in automotive and you take E-Mobility and Powertrain & Chassis together. I just want to understand basically what the -- how -- what the lower end of the range would imply? And if we should read the earnings guidance in the way that this is strongly linked to the revenue guidance? So if you achieve the lower end of the revenue guidance, you're also going to achieve the lower end of the EBIT margin guidance or you have got self-help potential, how you can avoid that?

Horst, thank you very much for the questions. The key to growth is the order book. And we have shared with you for December 2024, an order book in E-Mobility of EUR 14.7 billion. Now some of that has materialized in the year 2025 with sales. New order intake in 2025 for E-Mobility was EUR 9.3 billion, with a book-to-bill ratio of 1.9. And for sure, yes, we have adjusted orders during the year, to some extent due to the situation in the U.S. And for sure, to some extent, because there are no volume guarantees and some orders have volume assumptions that we don't think are possible.

So what you have is you have an order book of EUR 40 billion that sits in front of us where we have an increasing BEV and HEV share where region China is growing. We said this morning in the press conference that the growth in China in the order book is predominantly with Chinese customers. All of that gives me enough hope that it's possible for the next years. Certainly, an environment -- provided that the environment does not completely derail and destabilize that it's possible to grow this business. It's up to us to deliver that. It's certainly up to the customers to make sure that their cars sell. There is no guarantee for this, but there's a very good opportunity to make that happen at least from today's perspective. And that's certainly also a function of the fact that we are well diversified and not only diversified across regions, but also with customers and with products. And the fact that this is probably the most complete offering that we have and we don't need too much extra new orders to get there, gives additional comfort.

And in PTC, you can also do the same math here. The order book has reduced a bit because we delivered all these sales and the order intake is not just compensating for this. There's also slight adjustment, but it's still an order book of EUR 30 billion that needs to be materialized. And that, from my point of view, is again explaining why it is possible, in particular, in a world where F becomes more important. And you see this in the U.S. where our PTC colleagues are benefiting.

PTC is also on other fields like sensors, like trucks, like 2-wheelers. So I think that guidance for 2026, also complementing on what Chris said is possible and doable. Yes, your guidance math, if you just take the lower end, then you get the pictures that we don't foresee. We typically look at this as a sort of one-by-one logic and say, it needs to match for sure. It needs to match vertically and needs to match horizontally, but to put likelihood now against the situation where you would say low end always means low end and margin is, from my point of view, something that we have not done so far.

What do we have in our toolbox if we see that the first quarter or the second quarter doesn't work out as well? Well, the key thing we are focusing on is cash flow, and we know how to manage this. We have clearly a list of priorities on what to do and where to invest or postpone investment if necessary. That's not the case. Let's be very clear here. We started well into the year with a solid January and also with a promising February. There's New Year's -- China's New Year in between. But I can say both on the overhead cost side and also on all the other free cash flow elements and certainly with planned performance, we're able to compensate at least partially if there would be a situation where our key businesses don't grow.

That's something that we have shown before. It's certainly not what we think is realistic. But if that would come, we are prepared for this. I can say, Chris, when all of this came, we have also in our latest Board meeting said, if this becomes a little bit more difficult with the environment, what then happens? We will be more careful with spend, put in extra spend control. And I can only say that the organization is capable of playing the operating leverage game, if necessary.

That's great. Good answer. Just if I may sneak in a follow-up for Christophe, maybe. I've seen in your backups that your target is more than 100% tax rate in 2026. I wonder when that is normalizing. I think that's still related to this Vitesco consolidation and suboptimal tax structure. So I thought it was cleaned up already in '25, seems to take longer. When we -- can you maybe give an outlook on the tax rate beyond 2026 as well?

That's a complex topic to tackle. Happy to take that one off-line at some point. What I would say today is we are suboptimal in the way we are organized today. The work is ongoing. You will see moves in 2026 to address this. It will not be a silver bullet, magic wand type of thing. There will be actions that we should be able to communicate on if I had to guess during Q3. That will tackle a part of it. The rest also has to come from an improvement in our cost competitiveness and the health center of our business in Europe, which tends to focalize on the German tax pool. So when will it normalize? Not in a few months, but work ongoing. And again, happy to give you more flavor and actual numbers over the next few calls or during one of our meetings.

Is there, Christophe, kind of a target tax rate with regard midterm 2028?

Horst, maybe I can explain it slightly with an additional thought. In the last years, we have always been conservative with balance sheet risk. And you see that we have more or less no deferred tax assets anymore on the balance sheet. That's a good thing in an environment that is risky. That does not mean that the losses that sit in the system somewhere are lost. So you can think about this like being conservative on the balance sheet, therefore, a high tax ratio. But in terms of cash that you can save because you can utilize still existing losses, that potential has not been given away.

Then the next question comes from Ross MacDonald from Citi.

It's Ross MacDonald at Citi. I had 4 quick questions. I'll keep them brief. The first one is on the seasonality in the business. If I look back over the last 2 years, the first quarter of the year has typically been the highest from a margin perspective. Obviously, the exit margin in Q4 is on the low side. Can you maybe talk around the seasonality that you should expect in 2026? Would it be fair to assume another strong performance on the margin side in Q1? And maybe some of the building blocks behind that. I'm conscious that China is rather weak. So your first one on seasonality on the margin for the 2026 guidance.

Second one, just on Slide 15, looking at the performance improvement programs at Schaeffler. Can you maybe talk around why, given there's 1,800 headcount reductions potentially in 2026, why we shouldn't expect to see larger P&L savings this year? It looks like the year-over-year delta in the EBIT benefit from those restructurings is somewhat slowing '26 versus '27. So just good to understand the dynamics at play there. Maybe everyone leaves towards the end of the year, for example.

Third one on VLS. You're guiding again to 5% top line growth at the midpoint, which is obviously very solid. Can you talk around why you expect margins in VLS to be down slightly in 2026 and, therefore, no operating leverage in VLS this year?

And then final one, and apologies, that's been a lot. Just on free cash flow, can you give us the key moving parts for the free cash flow bridge? Should we expect working capital tailwinds in '26? You've talked around taxes already, but just interesting in how we should expect CapEx to develop '26 versus '25 and the working capital trend?

Okay. Let me maybe take the months in the middle, Chris, and if you take free cash flow. And the -- I can also do the margin seasonality. Let me start with obviously your interpretation on Page 15. You're going beyond what we have been thinking about. We gave you the actual figure. That is certainly not a booked figure in a sense, but the figure derived from the implementation of measures of EUR 285 million. And by no means, I want to indicate that as the column -- the dark green column is a little lower in 2026. That just is now already the profile for what's coming next year. That would be wrong.

So please forgive us there the shape of these bars is not proportionate to what you saw in 2026. I have not even thought about this, but I will do this next time as you're obviously interpreting something into this. The way from EUR 285 million to EUR 815 million, there's nothing that is projected in this chart. Otherwise, I would have put the EUR 815 million somewhere else. Forgive for that negligence, but we will take this away for next time.

And in terms of the margin and the growth, yes, that's a legitimate question, why is the margin not improving? I would give you as an answer that this is, to some extent, a mixed question. You know that we have a Chinese activity in the VLS activity. There's more platform business. As that grows, it is slightly dilutive to the margin. So you can basically say the classical business generates more margin. The growth to some extent comes from these Chinese activities and the blended mix is still at the 15% -- around 15% mark from our point of view. It's certainly something that is healthy. In VLS, yes, I would love to see all quarters boringly the same, but that's not the case. There were some issues here that impacted the margin that have to do with logistic investments and other things.

So take it over the year and don't interpret too much in a quarter. The fact that Q4 was down a bit also has to do with here and there changes in the programs. In general, we are optimistic that we can stay over the year at that level. Chris, if you want to add something on VLS, please. Otherwise, I'll leave you with the free cash flow question.

I'll take the free cash flow. So CapEx, you should expect something more or less in line what we had in 2025 and a little bit more. We will work to phase down some of the working capital that was added in 2025 as we have a little bit more visibility. Again, I put this between brackets, given what happens in the world these days. But as soon as we have a normalized situation, obviously, we work on normalizing the inventory levels. We are also getting better at E-Mobility launches, which is a significant driver of the buffer stocks that we implemented on upstream components in order to protect safe launches in 2025. So as we get better and better at it, we can target more tailored inventories than not necessarily have as much, let's call it, excess inventory.

Coming back on the quarterly topic. Again, when you look at our business, you really need to take it piece by piece because the dynamics of our profits and the way gross profit and EBIT is generating during the year really, really varies. If I oversimplify things, PTC is automotive-driven. So expect 3 quarters of solid performance and a typical fourth quarter where the OEMs will manage their year-end inventories and tailor down the demand. Obviously, this has an impact on efficiency of our plants.

VLS, it's more or less the same thing. Normally the bottom line, if I look at myself at the EBIT level and I take away the one-offs that we book here and there, it's normally a healthy, stable contribution throughout the year. The fourth quarter tends to be a bit weaker simply because what you're seeing flowing through is the increased cost per unit coming from the plants of the group that make the VLS parts running at slightly suboptimal parts.

E-Mobility is that it's actually the flip side. In 2025, if you look at the quarter-by-quarter, you have many things that's happening. You have the relative scale up during the year, but you also have the fact that a lot of the negotiations with our customers are only concluded in Q3 and Q4, which tends to lead to stronger invoicing on R&D, on cost recoveries during the second half of the year and especially the Q4, which tends to drive a better contribution, even though it's still negative during the second half of the year.

B&IS, exact opposite. Normally runs full with efficient plants for the first 2 or 3 quarters of the year and is impacting during the fourth quarter by the sheer size of its industrial assets running at a slightly slower pace. Again, in line with market demand. We are reacting to what our customers want us to do, whether they are automotive, just-in-time type customers or distribution type businesses. But for sure, very few businesses call for excess inventory in Q4 of any year. So again, the readability of our numbers really to be done at division level. And understanding the seasonality of it to really wrap up on this. On some of our divisions, we have been working in 2025 in trying to balance the use of our assets during the year to try to avoid some of those ups and downs. The successful Q4 results in 2025 versus what happened in 2024 is one example of that. But we cannot shy away from the physiognomy of our businesses and the assets that are there.

Got it. Maybe just to close that point out. The Q1 trading then, should we expect a sequential improvement in Q1 versus Q4 '25? Just be helpful given the U.S. weather patterns in the China demand, how you think about Q1 margins specifically for Schaeffler at the group level.

That was very quick, Ross. Can you quickly say it again?

Yes. So really helpful color on the seasonality. It was just really just on the Q1 trading in 2026, how we should think about the performance of Schaeffler in the context of the full year guidance given that you've had typically quite strong Q1s in '24 and '25? Or should we be expecting Q1 to be comfortably in the guidance range?

This was not -- this was obviously not only VLS, but the whole group. Again, the pattern of the last years is nothing that is going to change over 1 year. So typically, yes, we have been strong in the first quarter. Let's see what this quarter brings. I can only say what we saw in January so far is an -was an encouraging start in the year. In terms of profitability, how that continues now in February with China New Year and what's happening now in elsewhere around the globe remains to be seen. It's really difficult to project. We're not forecasting and guiding on quarters, guiding on a full year. So forgive us if we are not giving you more color than what we just gave.

And the next question comes from Vanessa Jeffriess from Jefferies.

Just if we can go back to your midterm targets. Now in E-Mobility, you have the order book. But I guess where I question most is B&IS, where you expect sales to be kind of 10% higher in 2028 at the midpoint even though industrial production is basically growing 1% to 2%, if we're lucky and aerospace is still such a small part. So wondering if there's something we should think about in terms of growth dynamics there.

And then just another one on E-Mobility and the slower margin development in 2026. Maybe I was under the impression that kind of 1/3 of that business, which is ICE, is already making good margins. The improvement potential is in the rest. So there actually should be some offset within that division from slower EV adoption and mixed benefit. So maybe you could comment on that.

And then lastly, congratulations on your announcement yesterday. I was wondering if you could talk about your actuation capabilities in humanoids versus some of the Chinese competitors.

Okay. Thanks for the nice words on humanoids. Again, on the midterm targets, we gave you the numbers for the group. We have not given any divisional numbers, if I'm not mistaken for midterm targets. It's only group level -- sorry, the division level, but not -- it's not in this book here. Then I need to see the numbers again. It's in the CMB. I don't have the CMB page in front of me. So my mistake. I remember that we said we want to go to 10% to 12% for Bearings & Industrial. And when I see where we are, that basically means in 6, in 7 and in 8, an improvement that is -- I would say 9% to 11%, sorry, my mistake. Forgive me, it was a hectic day. So I don't have this on the top of my head.

So 9% to 11% was the number and not 10% to 12%. If you take that and say 3 years to get there, then I need to deliver something around 10%. That basically means that you have to further improve margin from 7.5% to 10%. That's 2.5 percentage points in 3 years. Is that doable? Yes, for sure, that's doable. Knowing that we have some of the impact from our improvement programs not already in there rolling in. Yes, you also need a little bit of growth if the market becomes completely sour and only moves sideways, that would be, from our point of view, at least not the base scenario, then it becomes more difficult.

But I don't see any reason why with this base now in 2025, with the assumption that the whole industrial production market will grow over the next years in a 2% to 3% range, it is possible to bring that into the 9% to 11%. We need growth. We also need to push growth there. And you will see from announcements in the next months that this is clearly a question also of fight for market share. But it's on the other hand, also cost improvement. When I see what happened from 2024 to 2025, when I see what we are projecting for next year, then that is certainly something that I see as a very realistic path in Bearings & Industrial Solutions.

Then the next question comes from Tobias Willems from LBBW.

The first question would be about the business with humanoid robots in Defense. Schaeffler stated that numerous partnerships have been concluded in the last couple of months. What further turnover are we talking about here when it comes to order intake or revenue? And also can statements be made about future margin targets in the business fields of Robotics and Defense?

And the second question is about the business with E-Mobility. I'm wondering here a little bit what makes you exactly so serious to achieve profitability in 2028 because the whole market, especially in China, is quite under pressure when it comes to volume and margin? Or do you see in other markets significant opportunities when it comes to margin improvements to come to your targets?

And my last question would be about the restructuring costs. Are there any restructuring programs or costs ahead for the years 2026 and 2027? Would be very helpful if you could provide us with a little bit more color here because, obviously, you said that the big part of the restructuring costs and also programs are also gone in the last couple of years. So I'm quite wondering what is the target here for the 2026 or 2027 costs here?

Let me start with the last one. What I said is that we've always done it this way. We'll finish the existing restructuring program first before we think about new restructuring programs. This is a way to do it. This is, I think, restructuring program #5 that I'm responsible for, and we've always been doing good in doing this sequentially, when needed. For the time being, at the moment, there is no new restructuring program necessary and also no new restructuring program planned. If that changes, we will certainly think about what we can do next. And we have that experience, and we know how to do that.

The second answer to your restructuring cost question is what I said is that we have booked all the provisions on the balance sheet to be able to now pay the necessary restructuring outflows. That means from a balance sheet point of view, yes, we have enough provided for, for the existing programs. For new programs, that would be a next decision we need to take. I can also say that for the time being, also with the speed in terms of realization, what we see in terms of the average cost we need per headcount, it looks like that our restructuring costs are rather conservative. That having said, meaning that they are rather rich than too small.

E-Mobility, again, you asked an interesting question. For sure, E-Mobility is not only in China. There are also other markets that start to embrace and discover E-Mobility. One of the markets that is quite interesting to observe is India. We have, by the way, from China now being localized to India, a program with a major OEM in India, a name that you all know called Tata. And what we see there in terms of interest and volume is certainly not being a surprise growth driver that takes over the Chinese development, but it's something very interesting that also in other markets, the application of E-Mobility starts and plays a role. And if India continues to grow as also -- as an alternative to the Chinese market, and for sure, India is important to us, that could be an interesting midterm opportunity.

On humanoids, as we said, we are in a starting situation here. We don't book at the moment any bigger revenues, except for revenues for prototype orders. But we see that our -- the interest is increasing and increasing. I'm 100% sure that we will, during the next years, build a proper order book there. And therefore, we remain on track to deliver on that opportunity. As we always said, it's nothing for 2026, only minimal impact in 2027, but the long-term opportunity from this business is huge.

Ladies and gentlemen, this was the last question. I would now like to turn the conference back over to Heiko Eber for any closing remarks.

Thank you very much. So being respectful of your time and hours, let us close today's call. Thank you for your continued interest in our company. Thanks for the questions. Thanks a lot to the speakers. And of course, thank you very much to the team for the preparation. And as always, if there are questions afterwards, feel free to reach out to us. Happy to see you tomorrow during our roadshow in London. And with this, thank you very much. Have a nice rest of the day.

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

Ladies and gentlemen, welcome to the Pre-Close Call Q4 2025. I'm Sergen, the Chorus Call operator. [Operator Instructions] and the conference is being recorded. [Operator Instructions]

The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Heiko Eber, Head of Investor Relations. Please go ahead.

Thank you very much. Ladies and gentlemen, I'm very happy to welcome you to our today's pre-close call on Q4 and the full year 2025.

Now before we move on to our content of today's call, I'm sure that, as always, you have all taken notice of the well-known disclaimer. Please note that the release and all the information herein is still unaudited and that our next quiet period will start today right after this call.

We are holding this call to remind you of relevant public information previously provided by Schaeffler AG or otherwise available in the market, which may be helpful in assessing the company's financial performance ahead of the Q4 and full year 2025 results on March 3, 2026.

Looking at the agenda, as usual, I will guide you through the key messages and give some more clarity on our 4 divisions. After our short presentation, you will have the opportunity to ask questions. And with this, I would directly jump into the content of today's presentation.

We will start with a brief overview of the key aspects of Q4 and full year 2025. For sales, we expect Q4 to be flattish quarter-over-quarter, but for full year, lower than previous year. However, within our 2025 guidance range of EUR 23 million to EUR 25 billion.

Our Q4 adjusted EBIT will be clearly higher than Q4 2024, but lower than in the prior quarter. Full year profitability will be around the midpoint of our guidance of 3% to 5%. And I would like to ask you to keep in mind that 2025 was not a straight year. Some of you might still remember the implementation of tariffs, the availability of rare earths, Nexperia, and the overall weak market. So finally, ending up at the midpoint of the initiated guidance is quite an achievement.

Regarding our free cash flow, we anticipate another strong quarter, only slightly lower than Q4 2024. Full year shows a significant step up in comparison to last year around the upper end of our updated guidance range of 0 to EUR 200 million. Please keep in mind the strong free cash flow in Q4 is partially a result of early payments of selected out of OEMs. It looks like the one or the other customer has considered 2025 as a last year and therefore, we received the one or the other early payment. And for sure, you can only collect these funds once.

Now on Slide #4. Let's take a look at our 4 divisions, starting with E-Mobility. In a still challenging market, especially in the Americas, the trend towards electrification remains globally fully intact. Q4 shows a slight growth year-over-year, thanks to the ramp-up projects. Full year sales should trend at the lower end of the guidance, but also here, keeping in mind the latest market strengths and highlighting that our outperformance, especially in the battery electric vehicles is still significant. Same is true for our continuous success for acquiring new businesses in the hybrid field, but more details than on March 3.

When talking about profitability, we were able to further improve our EBIT year-over-year in Q4. This brings us comfortably within our full year EBIT margin guidance range. Q4, nevertheless, and I know you're all aware, it's not yet the new normal, but as every year, supported by R&D reimbursements.

Looking at Powertrain & Chassis, we are still facing a soft market environment, especially in Europe. This leads to a moderate sales decline in Q4 year-over-year. For the full year, we see a substantial sales decrease, mainly driven by phaseout businesses. So things that we are executing and that we communicated early on. And this, in combination with an anyhow soft market in Europe. All in all, full year sales will be close to the lower end of the guidance.

On the margin side, we expect Q4 margin to come in clearly lower year-over-year due to the lower volumes overall. When you look at expected full year margin, it should cruise within the lower half of our guidance range of 10% to 12%. We could, therefore, still secure a decent double-digit margin level for our PTC business and this in a highly challenging environment.

Taking a look at vehicle lifetime solutions, we see a robust demand in all regions, influenced, of course, by the growing and aging car park. Q4 will show mid-single-digit growth year-over-year. The same is true for the full year growth rate, leading to full year sales at the lower guidance band.

The EBIT margin in Q4 is slightly up on a year-on-year basis, leading to a strong full year margin level around the midpoint of our guidance range.

Last but not least, Bearings & Industrial Solutions. Here, the market environment overall, still more on the soft side which is not a big surprise due to the ongoing geopolitical and economic uncertainties. With regards to sales distribution, Q4 will show a slight sales decrease year-over-year, leading to full year sales well within the guidance range.

On the margin side it is clearly higher year-over-year, which is not a surprise, as you all remember, our very weak Q4 2024 in this division. But also underlining the clear improvements we see mainly related to our initiated structural measures. The full year profitability with continuously improved margin profile is safely within our updated full year guidance range.

Now moving on to Slide #5. This slide shows our most recent guidance for 2025, which we anticipate meeting across all key metrics. We will provide the 2026 guidance in the same format as you already know, as this is also aligned with the structure of midterm targets for '28. And of course, we would like to make sure that we are as transparent in reaching these targets as possible. Further details, as said on March 3.

Finally, on Slide #6. As a reminder, our midterm targets for 2028. We are fully on track to reach all our targets. Nevertheless, as already mentioned at the Capital Markets Day, the improvement of our financial KPIs will not be linear. For the free cash flow development, please keep in mind that in 2026, the free cash flow will be burdened by material restructuring cash out and the fact that our 2025 free cash flow saw some early payments by customers as already mentioned.

And to be honest, also on the CapEx side, we have seen a reinvestment rate in 2025. That was on the low side since we were very carefully managing our investments. We will continue to do so also in, but we expect slightly higher investments to further push our future growth opportunities.

So before we finally jump into our Q&A session, just one short notice. After the call, as usual, we will distribute our consensus sheet. And we would be very grateful for your contribution and your estimates ideally until February 4.

And now let me hand over to our operator for the first question.

[Operator Instructions] You have the first question coming from the line of Christoph Laskawi from Deutsche Bank.

[Technical Difficulty]

You're very hard to hear. The line is very bad.

Sorry, is this now better?

Much better.

Yes. Sorry for that. I'd like to start with a question on PTC. If I read your comments right, quarter-over-quarter, you should be around flat. Yet you indicate margin actually down year-over-year. Essentially the same top line in Q3, you had a margin, which was, I think, around 11%. Could you just elaborate a bit on what should cause the....

Sorry, Christoph, the line is unfortunately breaking up.

I hope you can -- yes, I can. Is it now any better? Or should I try in the line?

It seems to be better now. Sorry, I didn't catch the last part of your question.

Okay. Sorry for that. Again, just wondering if you could shed more light on what should be causing essentially the same top line level Q3 versus Q4 and PTC, the margin to drop by more than 100 basis points, considering that you had, again, an improvement in over Q3 last year. You mentioned volumes, but just a bit more explanation will be great to have?

And then just a question, if your management or in the meetings you had over the recent weeks, elaborated or any further '26 building blocks. I think free cash flow you already pointed to that there's a risk that it could be down year-over-year. Anything else on top line or the segments will be appreciated.

And then last question, just like you said yesterday evening to build out 1-million unit capacity in Fremont for the Optimus. Is this sort of in line with your expectations on the development of the capacity? If you could shed some light on that or just share your thoughts?

Yes. I mean on PTC, it is -- I know that the answer is very boring, but it is to a big extent, a mix effect. So the quality of the business has not changed between Q3 and Q4. The take rate for project with a little bit of a lower profitability, unfortunately, was higher. This is mainly a regional phenomena. That's why, let's say, Q3 was maybe not yet back to the new normal. Q4 is maybe a little bit lower than what we are able to generate. So if we take the overall mix for 2025, demonstrating that we could still deliver a solid double-digit result, I think that's a good indication for the way forward.

And again, all these special effects that we have seen this year, many of them directly impacted the colleagues at PTC. For sure, we were able to pass on most of the cost to the customers. Will you always be able to recover 100% -- honestly speaking, not. So I guess we all wish for a year normal 2026 that will be beneficial for all of us.

Regarding the, let's say, the indication for 2026. Free cash flow, as I said, we have -- and also this is not a new information. We always said that 2026 will be the year where we see the highest level of burden from our restructuring and integration efforts. We will see a slight increase on the CapEx side.

Nevertheless, the underlying business and the underlying cash flow is fully intact. And there, we see steady improvement. We saw very nice improvements when it comes to working capital management, especially in the second half of last year. So all the measures that you normally take in order to optimize or further improve your cash flow generation are well executed. We have the onetime effects well known, well communicated.

So we expect another year with a positive free cash flow, just to make this clear. Will we see a significant improvement or will we see an improvement compared to 2025, unlikely thanks to the -- or due to the onetime effect. Sales also there, not a big change in the market. We don't see significant uplift from the market, especially on the auto side. Industrial side, a mixed picture. So let's say, we are carefully optimistic on the industrial part.

And if you don't get a significant tailwind from the market, all you can do in order to improve your profitability is do your homework, execute what we have committed. And for us, it means execute our restructuring program, execute the operational excellence to make sure that we have flawless launches. And with that, we should also see a slight improvement on the profitability side. But again, it's not a straight line between where we are today and our ambition for 2028.

Last but not least, yes, of course, we have all seen the Tesla announcement, including the fact that you have to stop production of Model S and Model X to free up capacity for the various Optimus. For us, nothing has changed. Now we are strong believers in this market to become significant. We still see EUR 1 million plus/minus humanoids in 2030 as a realistic starting point.

The real question will be answered afterwards because it's an ecosystem in the making. And at the moment -- and maybe this is a little bit of a general comment. But in the moment, it is much more important to establish yourself as an, let's say, irreplaceable part of this new ecosystem and not so much in discussing whether or not the one or the other volume assumption is realistic.

To be honest, we all know the hit rate of Mr. Musk when it comes to projecting future volumes. So let's take it as a strong signal that he believes in the market. And at least when it comes to which markets will develop is usually right whether or not the volumes are given to be seen.

The next question comes from Ross MacDonald from Citi.

Hopefully, you can hear me and apologies for any background noise. I'm again in the airport. First question, I'm sorry to ask, but on the Q4 margin at the company level, there is obviously quite a wide range you've given. Obviously, Q4 '24, 1.8% higher than that, but then you're saying lower than Q3 is 4.5%. Just if I can push you a little bit, the full year -- if the full year comes in at 4.0% exactly, that would imply a Q4 margin about 3.4%.

So I'm looking at the consensus is around 4.1% for Q4. So I'm just curious how much more information can you give us on the Q4 margin? Because if I read the slide, with potentially a small miss on the Q4 group margin over 10% on adjusted EBIT. So just be helpful if you can maybe give us some steer there. Does Q4 start with a 4? Or are we talking about a 3% plus margin in the fourth quarter? Sorry, that was long-winded.

And the second question, just on free cash flow. You mentioned a onetime early payment on the free cash from an OEMs. Any size you can offer in terms of how much that onetime impacts the fourth quarter just in terms of non-repeat?

Thank you, Ross. So on the Q4 margin, what should I say? The initial calculation you did is it's not wrong. And for sure, that is due to the fact that we have a mixed picture if we look division by division. I think the biggest driver for the Q4 result, not starting with the 4 is PTC.

Again, pure mix effect, which is acceptable from my point of view. And we have to keep in mind, we have seen a year with a lot of moving pieces between the different quarters. This is mainly driven by the recovery of all these effects I mentioned before. Now we have to keep in mind, we have this rolling recovery of taxes. And despite the fact that nobody is talking about it anymore, they are still there.

We have a certain delay or shift between the quarters when it comes to recovery for the Nexperia topic. So we had a lot of moving parts where maybe Q3 was a little bit overstated and maybe Q4 is a little bit understated compared to the real performance of our company. That's why I would really -- I would ask you to try to look at the full year result and somehow keep in mind that this year was everything but normal.

And also there, I repeat myself, but the time we have given the guidance, none of these events was visible. And at least myself, I'm really, really proud on what the colleagues in the divisions did this year to overcome all these headwinds and to still make sure that we can deliver a result that is well in the middle of our guidance. On the second question on the free cash flow, let's say with rough numbers, just to make sure that I don't give you the complete breakdown of our free cash flow analysis. But let's say, EUR 50-ish million -- EUR 50 million roundabout is a good number when it comes to the early payments.

The next question comes from Horst Schneider from Bank of America.

I've got a few questions left. First of all, when we look at the current increase of the steel price and with that, the increase of the material prices, what impact is it likely to have then on 2026. I think it's not fully a pass-through for you. So you have to carry part of the cost yourself. Is it true or not?

Fortunately -- first of all, hi Horst. Fortunately, this is not the case. I mean, yes, the raw material prices are going nuts again. For most metals we have pass-through clause. So it follows a little bit the same logic what we have seen from the tariffs. You might see shifts between the different quarters and some customers basically compensated on a monthly basis or on a quarterly basis or some only every 6 months where you do the true-up. But on raw material prices, we usually can recover 100%.

And chip prices is no issue for you, also not at E-Mobility, right? Because it has got nothing to do with DRAM chips or so.

We have, of course, a little bit of an exposure for DRAM chips, but if we compare it to the semiconductor crisis some years back or the Nexperia potential last year, I would say we are still rather relaxed. There might be certain applications that are impacted.

For us, the bigger threat, and that's unfortunately being a part of these ecosystems in automotive, it is not so much the question whether we are seeing any problem, but sometimes it's a collateral damage. Now we all know if one critical part is missing, the OEM will not build cars. If they don't build cars, they don't buy our parts. So we're carefully monitoring it, but the impact for Schaeffler is rather limited.

Okay. That's correct. That's good news. Then on E-Mobility, because you also say that Q4 was not a too bad quarter. Maybe you can repeat again, I'm not sure if you said that, but what contributed to that? I know Q4 is always driven by R&D reimbursements, but we also had a lot of news from especially American carmakers that they decided to change the strategy on electrification and maybe they had to make some one-off payments as well, which were a benefit for you.

And in that context also, I would be interested what -- if you have made any specific comments already on the outlook for E-Mobility in 2026. It's still with the U.S. changing a lot and there the E-Mobility market is probably shrinking, not growing. What that means for you, if all in all, E-Mobility growth is going to accelerate in 2026 because also in '25, I think you had some changeover effect or if that is a more muted year that is ahead of E-Mobility as well?

Very good question. So let me say it like this. We never had the ambition to trade in anticipated business with the U.S. customers and get compensated in cash because that's just exchanging money. For us, it was much more important to make sure that we get compensation in the form of new business contracts. And I guess there, we have been fairly successful.

So at the end of the day, we have to see some of the awards we have seen in 2025, especially in the area of plug-in hybrids as part of the compensation package for reduced or canceled E-Mobility projects. And again, maybe that's one of the strengths of the auto piece of Schaeffler. We are, in this respect, hedged. And I cannot say that we are happy if projects get canceled. But with the structure with our portfolio, we are also very happy to get awarded with significant programs for plug-in hybrids. So on that -- with that respect, no significant tailwinds from compensation payments, but a very, very continuous inflow of order intake for the hybrid plant.

Now the outlook for E-Mobility, and that's a little bit -- it's always this crystal ball. We don't see that the implementation speed in China is significantly slowing down. Unfortunate -- fortunately, the market in China by now is not so much depending on whether or not there are government subsidies granted or not. In Europe, I'm sure it helps that a number of governments are supporting the decision to buy an EV. So we are a little bit more optimistic on the European piece, Americas. Americas for E-Mobility is a very, very scattered market. No significant change in the take rate in California in the Rust Belt, try to find a charging station.

So all in all, we will continue to grow in E-Mobility. We will continue to work our way towards the breakeven. It is not a step function. It is a continuous improvement. And the focus for this year will be like it was in the last year, make sure that we get all these ramp-ups managed in a way that we are avoiding hiccups in the ramp-up because that's the fastest way to burn money. So flawless launches, operational excellence in the ramp-up, that is the name of the game.

Next question comes from Vanessa Jeffriess from Jefferies.

I'm interested in what you just said about not taking cash compensation and getting new programs in hybrids instead. Does that have a mixed benefit for you?

Needless to say that for the time being, the profitability for our Heritage ICE project is still slightly higher than on the E-Mobility side. So given the nature of a hybrid application, yes, that has the potential to have a positive mix effect.

On the other hand, it is a little bit of a difficult calculation because we need a certain threshold volume on the BEV to get the profitability up. So this is challenged, of course, with volume being shifted towards plug-in hybrids. So without doing the detailed calculation, I would say, we have some benefits on the mix effect, but we have some challenges on the volume. We need to make further or faster progress. So I guess on a group level, the impact should be rather limited.

Okay. And then could you please talk a little bit about how you're seeing a different industrial markets this year, given that you said you're kind of cautiously optimistic?

Yes. I mean -- the -- maybe let's go through one by one. Let's start with wind. Wind, there have been a number of significant initiatives being announced, whether they will already have an impact for 2026 to be seen. But I mean, there was the announcement from a number of European governments to create the world's greatest power station in the Baltic Sea. Let's see. I just wanted to use this example to show that the trend for increasing installed capacity in which industry is unbroken. And being the world market leader for bearings in this area, I guess we have a fair chance to get our share.

On Industrial Automation, maybe the most funky piece of our business because with all the stimulus programs being announced beginning of last year, there have been expectations that we see a faster recovery of the overall industry, which would, of course, also help our industrial automation piece. I have the feeling that this waiting will go on for a while. So we don't see very clear indications that the market is significantly changing. Where we see an unbroken strong demand is on aerospace, on rail. So that still is super promising. Especially in Aerospace, we really are very busy in making sure that we free up enough capacity to serve the market demands. So there, the trend is unbroken.

And let's say, the newer activities in our industrial sector, they start very promising, being it medical or some of the other well-known activities. So industrial maybe we have good reasons to be more optimistic than on the auto sector. And again, for us, another proof point that it makes a lot of sense to have this relatively broad portfolio. Otherwise, this year would be more challenging.

Great. And sorry, can you just give us a guide on when the other division ends up for the year?

I'm sorry?

Can you give us a guide of where the other division ends up for the year?

Thank you for not forgetting about our other division. So let's say, Q4 was pretty much in line with the previous 3 quarters, both when it comes to -- I mean, on the sales side, a little bit higher in Q4. On the profitability side, I would say the losses are pretty much flat compared to the first 9 months.

Let's see what happens if the next year hits?

That what we will share happily on 3rd of March.

[Operator Instructions] Next question comes from José Asumendi from JPMorgan.

Congrats on the share price performance. That's the first thing. Three quick ones, please. Have you given any comments in the last weeks on the -- on investments for humanoids? Any signals, whether it's capital intensive, it's not capital intensive? Any comments on that front?

Second, can you speak about -- or have you given any comments with regards to the start of the year in China? It looks like sales production will be down in January. Any recent comments on the data you have seen?

And then three, again, in E-Mobility, the fourth quarter, any guidance with regards to maybe the sequential move Q4 versus Q3? Are we seeing losses coming down in Q4 versus Q3? Or should we expect the sort of flat Q4 versus Q3? And I fully get the message you're giving. I don't look at the quarter look at the full year in terms of the improvement, just the quarters -- the quarters make the year, but obviously, we look at these things in the context of the full year. But yes, those 3 topics, please.

So maybe starting with the question on humanoids. I think that the main reason why we are so excited about these opportunities in the humanoid space is exactly the fact that it doesn't require huge investments on our end. We are mainly talking about products that we have already in production where we have already installed capacity.

So we can redeploy the machinery, we can redeploy the product development and that is very much limiting our upfront investment in this space. This sometimes is misunderstood towards there are no investment at all. This is, of course, also not the case. We have to -- we have specific tooling that we need to invest.

We have R&D teams that are making sure that we are adjusting our existing products to the specific needs of a humanoid. But -- and taking the market potential into consideration, if we compare it to the billions of euros that we have invested in E-Mobility, the entry barrier for us or the upfront investment for us in humanoid is -- I don't want to use the word neglectable. But what I can say, when we initiated our midterm targets, we clearly said that in the top line and in the bottom line, there are no impacts from humanoid considered.

But now that we see how the market is unfolding. I would still not see any reason why we would touch our midpoint targets -- our midterm targets. So in a nutshell, we have efforts, but they will not impact our financials in a way that we would need to adjust our midterm targets. We will finance it out of our operational income without challenging the future. So I hope this is answering the question on the humanoids.

China, to be honest, we are not really surprised about a, let's say, a slower start in China. We have seen a fairly strong Q4. That's the usual pattern that we see in China. After a strong Q4, you get a rather disappointing Q1. The pattern is not so much different from the previous years. That's why, at this point in time, we are fairly relaxed when it comes to the market development in China. What we hear from our customers for the full year is also not indicating that something extraordinary should happen.

And last but not least, E-mobility. I mean, it is clear if you want to get to breakeven in 2028, the latest. You need to have an increase year-over-year. So also for 2026, we will see a further improvement. Again, not this linear curve. It's a step-by-step improvement. And also here, main focus this year get all the ramp-ups executed properly, and then we will take the benefit of this, hopefully, flawless launches in the years after.

Next question comes from Horst Schneider from Bank of America.

So I was kicked out while you were answering my question, but I think I got the end of it. So that's fine. I just want to follow up on the U.S. again, because a lot of carmakers are saying that they intend to shift to larger engines, V8 engines. Is that a mixed benefit for you in PTC in 2026? So when you quote now that Q4 was impacted by negative mix, could there be a hope that 2026, we see a positive product mix coming from the U.S.?

I mean, in general, Horst, we are not -- we are not saying no if customers insist on getting products from us that we can that are already developed and where the investment is already in place. So per definition, this has a positive impact on our PTC business. The announcement from the customers and the shift towards these, let's say, larger engines, this is not happening overnight.

So at least for the first half of the year, we don't see a significant change in the call of volume from the customers. With the, let's say, new more limited visibility that the customers give us too early to make a statement for the full year.

But I think in general, it would be it's a mix impact that we are, of course, happily accepting. Nevertheless, and I have to repeat what I said before, for us, it is not just about short-term benefits in making a little bit higher margin on existing products, but we would be very happy about a more balanced volume distribution to make sure that on the one hand, of course, we can materialize on our existing products, but of course, also having the right amount of cars sold for our E-Mobility applications.

Yes. Okay. That's great. Then the other one that I had that was an outperformance. I know for -- especially in the context of E-Mobility, it's difficult to talk about outperformance, but when we club PTC and E-Mobility together and we think about the like-for-like growth, is it fair to assume something like 2% outperformance? Or do you think it's higher or lower than that?

Very honest answer. We are not done yet with the final analysis on the volumes. So more details on that one.

I know it used to be under the old [ Schaeffler ] it used to be always 2% in automotive. So therefore, I was taking this 2%. So -- but if you have got no comments, that's fine. The other question -- or the last question that I had then that was on when you talk about cash out restructuring, can you remind us again what was cash out restructuring or what you have guided for cash out restructuring in '25? And you say that 2026 cash out restructuring can increase. Can you be a little bit more specific how much it would increase?

Yes. I mean we -- remember, when we had -- when we published the program on our restructuring, and we always have to see it in connection with the onetime effects we have for the integrational efforts, which are still ongoing, of course. We indicated that an amount of roughly EUR 100 million or a little north of EUR 100 million for the critical year '25, '26 million is to be expected. What we see at the moment is that the acceptance rate or our success in executing our restructuring is faster than expected, which, frankly speaking, is good news. But that, of course, also could lead to the fact that we see in '26 slightly higher one-time effects compared to last year.

So that would mean then north of EUR 50 million, right? When you say EUR 100 million over 2 years, and I'm just guessing.

No, EUR 100 million per year.

All right. Okay. So it could be a little bit more than EUR 100 million.

Yes.

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

Thank you very much. Thank you for your time. Thank you for your interest and very interesting questions. Three more things I'd like to share. So for our beloved analyst, I would love to cordially invite you for our annual analyst breakfast, which will take place on March 4 in London. Our CEO would be happy to discuss our full year results and our guidance on site in London, so you're cordially invited. Secondly, as already said at the beginning, we will enter our quiet period effectively now.

And last but not least, big thank you to my wonderful team for preparing the document as usual. And now thanks for your time. Have a good evening and talk to you soon.

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

Ladies and gentlemen, welcome to the Schaeffler Group Q3 2025 Earnings Conference Call. I'm Sergen, the Chorus Call operator. [Operator Instructions] And the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Heiko Eber, Head of Investor Relations. Please go ahead.

Thank you, operator. Ladies and gentlemen, I'm very happy to welcome you to today's call on the financial results Q3 2025. The press release, the following presentation and our interim statement has been published today at 8 a.m. CET on our Investor Relations web page. And for sure, after the meeting, we will provide the recording and the transcript of this webcast.

As a quick reminder, please note that all figures for 2024 are pro forma figures unless they are marked separately as reported figures, and the mentioned pro forma figures 2024 and related information are unaudited.

As always, Klaus Rosenfeld, our CEO; and Christophe Hannequin, our CFO, have joined the conference call to guide you through the key information in our presentation. And, of course, afterwards, both gentlemen will be available for our Q&A.

Now, without further ado, let me hand over to our CEO.

Thank you, Heiko. Ladies and gentlemen, welcome to our Q3 call. You all have the presentation in front of you that we distributed this morning. You also saw the 3 press releases we published.

I will start immediately on Page #4 with the summary. Good performance in a soft market environment is the headline. You see sales growth of plus 1.3% in Q3. I will go into a little bit more detail there. Gross margin at 20.3%. Please read the footnote. This is the gross margin excluding an extraordinary one-off loss of EUR 100 million due to the depreciation of SAP licenses. It's a comparable number to the 19.1% in Q3 previous year. So you see a quarter-over-quarter improvement there.

EBIT margin at 4.5%, nearly a percentage point better than Q3 2024, also sequentially, clearly pointing in the right direction. Positive development and free cash flow, EUR 175 million in Q3, really points also in the right direction, also led us to upgrade our free cash flow guidance, as you saw in the last days.

And then EPS is negative, in particular, due to the one-off restructuring, but also due to the depreciation of SAP licenses on an adjusted basis, it is positive.

Now with this, let me quickly go through the business performance. You see on Page 6 the usual breakdown of where is the growth coming from. And we can basically say that except for the flattish development in Powertrain & Chassis overall, all divisions and regions contributed here. Europe is a little weaker than we would like to see it with minus 1.6%, also driven by Powertrain & Chassis. You see some of the unusual developments. Strong growth in Asia/Pacific is the same trend that we explained last time. It has to do with the shift of an important project from China to South Korea. And Americas with 18.4% in E-Mobility is new contracts that are now starting to perform.

Vehicle Lifetime Solutions was 2.3%, weaker than in the previous quarters. But we always said this 2-digit growth is not going to continue. So with strong growth in Americas, also in the 2 other regions, Europe here, again, is the reason why this was not as strong as before.

And Bearings & Industrials with 2.2%, I think, is in line with market. So a trend from our point of view that should not surprise anyone with 1.3%. At least the Q3 was a growth quarter despite all this turbulent environment.

Page 7 then gives you more detail in our OEM business, auto powertrain, that's what we promised to give you, the breakdown by powertrain type both for the outperformance number and also for order intake and book-to-bill. And what you see is a continuation of the trend that we showed you for the first 6 months. 9 months, plus 13% outperformance in BEV shows that we are well on track there. And HEV is, for these 9 months, still below market. The same with ICE. The number has come down a little bit. Key for going forward is not what we are pointing today, but the order intake and the book-to-bill, and there you see that BEV and HEV are more or less on the same level with 1.8x. Let me say here, as we outlined also during our Capital Markets Day, we have a significant order book. Our key priority is to deliver that order book. We appreciate new projects, but only if they make sense and also drive our profitability.

E-Mobility, next page, Page 8. As you probably expected, sales growth on the positive side, 4.7%, clearly driven by Americas and Asia/Pacific. Order intake in that quarter was EUR 1.2 billion, slightly below the second quarter, but still on track. That also leads to a book-to-bill in Q3 of 0.9. What really counts here is, from my point of view, the full 9 months. What is on the positive side here is the continuous improvement of the gross profit margin, plus 3 percentage points in Q3. And this also excludes the impact from the SAP licenses that for E-Mobility would have been EUR 24 million.

You see 2 examples for new products -- for new projects. And with the development that we see here, we feel good that we are on track to deliver what we promised for the midterm.

Powertrain & Chassis, slight sales decline. Gross margin continues to be strong and further improvement, 1.2 percentage points. Good order intake, but clearly with a book-to-bill that is below 1. As we always said, you need to, at the end of the day look at these 2 divisions somehow together, in particular when you think about the Powertrain business. And our idea that these hedges each other is clearly paying off.

Vehicle Lifetime Solutions, I already said it, lower growth compared to previous quarters, in line with market and gross profit margin further improving. We always said it's not going to grow every quarter by 10%. But I'm really proud to say that our gross profit margin stays at a very high and satisfactory level.

Bearings & Industrial Solutions, also here, we decided to improve our guidance a bit. The 5% to 7% was after a further improved third quarter. It's little bit outdated, so we moved it up to 6% to 8%. And we feel good that the business is further improving due to the various self-help measures, but also due to growth, in particular, in aerospace, but also in construction, agriculture, machinery, 2-wheelers and the new emerging area of medical equipment. Let's wait for the fourth quarter and see where we end up there.

Capital allocation, Page #12. We continue our course here. Capital allocation schemes are known to you. We are very disciplined here. You see the reinvestment rate at 0.5x for the whole year -- for the whole business, excuse me, and that clearly means we are releasing capital at the moment. That is important to bring the SVA number back on track. We are now slightly below previous quarter with EUR 12.3 billion. And we will manage capital tightly. Let me also say this does not mean that we have restricted any type of growth because there's enough cash flow available to fund the projects that we're seeing. But as you know, we are restricted and want to bring SVA back to where it should be.

Last page from my side before I hand over to Christophe, a short follow-up on the top 3 priorities that I explained during the Capital Markets Day. First is delivery of our order book. Again, we have seen a prominent SOP of electric drive products for a Chinese OEM. Again, an interesting player who is a pure play on the new energy vehicles. Several other SOPs, one in Europe for a premium European OEM and another one, again, for a European OEM and a Chinese OEM in chassis, rear wheel steering. So happy to say that the delivery of the order book is on track. The size is big and challenging, but we are learning. We are moving forward. And we are seeing good results from these 3 examples.

Synergies is also on track. You'll remember what we said in the Capital Markets Day. We have more or less finalized our program that we call our Program Forward. Here is more detail on the plant in Steinhagen that was already in the numbers that we showed you. We will finish production in the year 2026, the portfolio. We consolidated into another plant, headcount in production is outlined, and at the moment, negotiated with workers' council. And I can tell you that this cooperation with employee representatives has always been an asset. It's painful for everybody, but it's the right track to -- it's the right step to streamline in particular our German operations.

And last but not least, you saw the press release. We promised to streamline the business portfolio and reallocate capital. We said during the Capital Markets Day, there are 10 portfolio elements in the pipeline. This is now a first example. We have yesterday or this morning closed the contract with a Chinese specialist in turbocharger technology that requires our turbocharger business in China. It's a business that we inherited through Vitesco. It made EUR 100 million and is at the moment in a structural decline. So it makes a lot of sense to get rid of this. The agreement is signed. Please understand we're not disclosing more details, but it's a proof point of our promise to streamline.

With that, I hand over to Christophe and -- for the financial performance.

Thank you, Klaus. Good morning, everyone. After looking at the division look, let's take a step back and look at a single group level. Starting with sales. We delivered a strong quarter of growth once you adjust for foreign exchange. That growth, I'm happy to report, is profitable, as you can see on the gross profit evolution on the right side, EUR 119 million worth of volume effect. That's further proof point to the roadmap that we drew during the CMD. If you look at that EUR 119 million, close to half of it is driven by E-Mob. So we are growing, and we are growing profitably. The rest comes from the other divisions.

We are also improving our cost structure or operational performance. That's the EUR 111 million that you see there. E-Mobility, again, displaying some improvements, about EUR 20 million worth of improvement linked with E-Mob. The bulk of the improvement actually comes from Bearings & Industrial, close to EUR 90 million quarter-over-quarter, demonstrating the measures, both for structural and in terms of operational performance, are paying off and are improving our gross profit and thereby our bottom line.

A little bit of what I would call background noise on the next column with a mixture of inventory valuation, customer claims and a little bit of a restatement issued to be 100% transparent in the EUR 109 million. Foreign exchange, EUR 45 million, reflects the evolution year-over-year and our exposure to the different markets. All in all, from 19.1% to 20.3%. Again, this is corrected to neutralize the SAP license and not pollute the reading.

If I go to the bottom line and now look at EBIT, this is even clearer, 1 full point worth of improvement from 3.5% to 4.5% of EBIT BSI year-over-year. You find again on the right side the strong gross profit improvement, excluding foreign exchange, the very controlled approach to R&D, some negative impact on SG&A, which is mostly driven by integration impacts.

And foreign exchange, you can actually see here that the foreign exchange impact is lower at EBIT level than it is at gross profit level, thereby showing that the group has a little bit of an internal hedge even though the impact is still negative. And again, this drives a strong quarter at 4.5%.

If we spend a little bit of time on each division, E-Mobility, as I mentioned, growing by almost 5%, improving its profitability by over 2 points, growing across all divisions and doing so in many regions, double digit in North America and some strong growth as well in China. So, again, the roadmap that we have announced quarter after quarter, we are delivering on it.

On the PTC side, comment is one that you will hear, I guess, quite often from me in the next few quarters, it's all about balancing some slightly negative impact on the top line. There we see a slight decline. It was expected. It's linked to the phaseout business. But it is being balanced by an absolute laser-like focus on cost structure and restructuring to ensure that we protect margins and that we deliver the bottom line. In this quarter, the unit actually does more than that. And the improvement is over 1 point worth of EBIT year-over-year.

Also, interesting to see that some business divisions are still in positive territories, so Engine & Transmission Systems at 3.4%. And when you look at the details, this is actually also driven by China, which is encouraging in terms of balancing our exposure.

Vehicle Lifetime Solution, on the next slide, growing, still growing, slightly less than what you had seen in the past, but the environment is a little bit different. Nevertheless, delivering solid 2.3% worth of growth, 1.3 points worth of improvement in terms EBIT. Again, the interesting part there is where is the growth happening. It's happening outside of the traditional geographies for VLS, so strong growth in the Americas, which is still very much a conquest territory for us. And it's also happening if I look at it in terms of business division outside of the core Repair & Maintenance Solutions business division, but in the Specialty business in the Platform business. So resistance in, I guess, the home turf for VLS while the unit growth in terms of geography or in terms of product offering to the customer. Pricing, also on the favorable side, driving some of the EBIT improvement quarter-over-quarter -- year-over-year.

Bearings & Industrial, if you go back to my initial comment, some growth, very -- double-digit growth in our Aerospace Bearings, plus 20%. Even more interesting, in my mind, positive growth in Automotive Bearings in a complicated automotive context. The division is still growing in that sector by 2%. Combining this growth with the very, very strong work done in terms of, a, restructuring, and b, focus on operational performance delivers an improvement of 1.4 points in terms of EBIT, almost at 8%. You can see the 7.9% for Q3 2025.

This all translates into positive evolution of our free cash flow generation year-over-year, so we see almost a little bit more than EUR 0.5 billion worth of improvement from Q3 '24 to Q3 '25. I draw your attention on the bridge on the right side in echo to what Klaus said before to the EUR 244 million linked with CapEx, which is essentially us managing our CapEx spending to match it as close as possible to the need and the actual ramp-up of the different programs that are going through SOP and trying not to be too far ahead of the curve, not behind either in order not to put our customers at risk. So some really, really fine steering there in terms of pacing the spending and then also some steering in terms of focusing the spending where we create value.

On what would be the last slide for me, our usual slide on debt profile, you can see the leverage ratio peaking in 2025 during Q2 at 2.4, now slightly improving in 2025. On the right side, our usual maturity profile, you can see that the 2025 topic is taken care of at this point through the bond issue earlier this year. Also, happy to report that the RCF facilities have been all extended as per our contracts all the way to the end of 2030, which is an interesting check in the box to have. When you look at 2026 and 2027, you can see that this is all quite manageable given the current conditions of the bond markets either this year or early next year.

At this point, I will hand back over to Klaus to conclude on the guidance.

Christophe, thank you very much. Ladies and gentlemen, I will be brief. You've seen that page. Just to repeat the basic logic, we increased guidance on free cash flow and also for Bearings & Industrial Solutions in those numbers.

Let me finish with one more page on the other announcement we made today next to our numbers and also the little transaction in China selling turbocharger business. We announced this morning a cooperation agreement with NEURA. NEURA is, as most of you probably have heard, a leading German high-tech company active in the humanoid space. They don't -- not only do humanoids but other things as well. And we have agreed a partnership with them that will allow us to supply innovative actuation technology to them, which are, as you all know, key components for humanoid robots. NEURA and their founder, David Reger, are well known to the capital markets. It's the European player from our point of view. We're very proud of this -- for this agreement.

Second, that's already digested, I think, last week, October 29, you heard about the U.K.-based robotics innovation company called Humanoid, also something where we are active. We completed a proof-of-concept phase with them with what is called the pre-alpha robot, also a specific design. And we are now moving into a second phase. This is just to show you 2 examples that will help us to grow into that new ecosystem. We will continue to report on this. It's clearly an attractive growth opportunity where Schaeffler is very well positioned to conquer a significant space as a technology provider and a supplier of choice. I'll leave it here.

The last page is then the financial calendar. We are going on road show, separating West Coast and East Coast next week. And then there are the usual conferences for year-end. We also look forward to seeing some of you then in the new year in Frankfurt, New York and elsewhere. March 3 is our earnings release, and I am confident that we will bring the year to a successful close despite all the challenges that we have around us.

With that, back to you, Heiko.

Thank you. So operator, we would be ready for the first question, please.

[Operator Instructions] And we have the first question coming from Horst Schneider from Bank of America.

My questions, I would ask them one by one, please. The first one relates to this ongoing underperformance in automotive, which is driven by the phaseout of some of the Vitesco business. Can you maybe say how would the business have grown without these phaseout effects? And how long these phaseout effects still continue? So just try to get a feeling how long this drags down basically the outperformance.

Horst, thank you for the question. I'm not 100% sure what you're referring to when you say outperformance. I mean, E-Mobility grew by 4.7%. Powertrain & Chassis is, as I showed on Page 6, more flattish. Yes, we are -- we were selling business, as I said, but that's a new thing. Maybe you can repeat or give a little bit more color on...

Sorry, Klaus, I'm referring to Slide 7, which is a year-to-date perspective, to be honest. Maybe the effect is already over. Yes.

Okay. You're saying the -- okay, now I understand it. It's 7, where you're saying ICE is below where market growth is. Well, I mean this is, from my point of view, a situation that clearly comes from a phaseout of certain things. I mean, this is a market growth for the whole ICE powertrain portfolio, and it's a function of how present are you with what kind of customer. As you know, we are strong in dampener technology. We are strong in the sort of old classical Schaeffler technologies, but there's also business here from Vitesco that drives us to some extent, but I don't have more detail at the moment.

Yes. Okay. No worries. The next question refers more short term. Maybe if you can shed some light on the outlook for the fourth quarter. I know you have got your full year guidance in place, and that looks also fine. I just remember Q4 can be sometimes a tricky quarter, right, because unforeseen things can happen, as we experienced last year in industrial. So maybe it's also difficult for you to answer this question. But what trends do you see now in the fourth quarter? So I would assume that E-Mobility gross margin because the reimbursements come in and the highest share of that happens in Q4.

And then Powertrain & Chassis, I was surprised about the good margin in third quarter. Is that something that continues also in the fourth quarter in that trend? And then, am I right to assume that industrial usually is a weak quarter in quarter 4?

Well, I would phrase it like this. Q4 is typically a weaker quarter than the previous quarters because December, in particular, also is not as vibrant than before. Your description for E-Mobility, I think, is pretty spot on. I think that they will further grow and further improve because that's the trend.

PTC, I just spoke with Matthias this morning in our preparation, and he said the call-offs are stable. That's a positive sign. He also clearly said that China is developing better than expected, what is also something on the positive.

And when you look at tariffs, I think it's also fair to assume -- you're mentioning reimbursements on the E-Mobility side, classical situation, more Vitesco driven, but there is a synchronization benefit on the tariff side. We always said this, that will also support a little bit. So I think PTC, E-Mob will also benefit a little bit from this.

Yes, Industrial is clearly a little bit of a question mark. If we wouldn't be confident that this quarter continues in the right direction, we wouldn't have raised guidance. The 6% to 8% is not a big move upwards, but what we see so far is with all the headwinds that are existing in that business, looking like a solid fourth quarter, let's put it this way.

And in aftermarket, aftermarket is clearly something where I would expect that we don't get back to 2-digit growth numbers. But also there, the underlying fundamentals are continuing strong. So let's see what October brings and then we know more, but I would be cautiously optimistic that the fourth quarter is okay.

Okay. That's great. The last one that I have is typically...

For next year and all of that, that's clearly something that there are some unknowns and there are some uncertainties.

That's great. The last question that I would have refers to E-Mobility because Valeo talked about negotiations with OEMs to get reimbursement on some contracts where the volume expectations have not been met. Do you see the same? Could that be a driver going forward that we have not yet in our forecast?

Well, for sure. I mean, if you ask contracts where volume assumptions are massively under cut, then you seek compensation. That's a normal part of our business. But yes, that's -- there's nothing that we do not factor in. That's normal course of business from my point of view. But you all know that there is -- in the U.S., things have changed more dramatically because of the -- also the regulatory environment and the decisions that President Trump has taken. But in the other countries, that's not the case. But for the U.S., you clearly have a little bit of a shift in terms of how important is e-mobility going forward.

The next question comes from Vanessa Jeffriess from Jefferies.

Just wondering if you could please speak a bit more about the E-Mobility book-to-bill. I know you said you look on a 9-month basis. But with those customer postponements, are you seeing any exacerbation in those over the last few weeks?

This was very difficult to hear. Can you -- madam, can you please repeat this? I don't know where this is coming from, but if you could speak a little slower, that would be good for us, excuse me.

Sorry. Just with the E-Mobility book-to-bill and the customer postponements, I was wondering if you're seeing more postponements over the last couple of weeks, if that's exacerbating throughout the quarter.

No. I think we have seen what, in particular, the big U.S. customers did, but there is no increasing trend of people giving back business. That's not the case. But any adjustments are part of our normal course of business, but I wouldn't.

Christophe, maybe you have more insight. I don't know anything that points to a bigger trend towards the year-end, where we lose contracts or where volume goes back.

Usually, our business tells us that the customer decisions are not always synced up with our communication deadline. So to have some volatility quarter-over-quarter during the year, it's not unusual. But as Klaus said, no underlying strong trend that we can detect on this.

Okay. And then just on B&IS, just to be a bit more specific on what you said before. I know you said there might be some headwinds in the fourth quarter, but it seems in your new 6% to 8% range, it would be pretty difficult for you to get down to 6%. So I was just wondering your thinking around that and if there's anything specific in terms of headwinds.

I would call it a cautious approach. We have -- you have seen that the last 2 quarters were all pointing in the right direction and above 7%. You saw what happened in Q4 2024. So we are certainly positive, but to increase it even further would have not been, from my point of view, responsible.

The next question comes from Ross MacDonald from Citi.

Klaus and Christophe, it's Ross from Citi. My first question, Klaus, you mentioned Nexperia briefly in answering Horst's question. Can you maybe summarize where we stand on that issue as of today? I'm aware there's been some news flow over the weekend around potential exceptions. How do you see that situation playing out from here? Is it effectively resolved from your vantage point?

It's definitely not resolved yet. But I can say for Schaeffler, so far, we have been -- not really been forced to stop any customer. I can praise the agility of our teams here, the risk management work when this came in. And we're clearly benefiting here from the strong experience and the insight that the Vitesco colleagues brought here to the table. Again, we have so far managed through this, knock on wood. It's different than the crisis that we saw some years ago because it is driven by this specific and certainly unusual Nexperia situation.

It's, like before, a little bit of a race for where do you get a second source, how much do you have as inventory, which customer is asking for what. You need clear rules internally how you allocate what you have, and you need to be very quick to open up new purchasing channels. So far, that has worked well. But again, we are managing through that shortage like any other supplier as well. And I do hope that we get out of this with -- again, with not too much trouble. So far, that's okay. But we manage it on a day-by-day, week-by-week basis.

But you need to look at that a little bit in a broader context. They agreed that certain export control restrictions will be relaxed. But the Nexperia situation is a little bit unusual. So you can't just simply apply this on Nexperia here because you have the insolvency situation in the Netherlands, you have the Chinese reaction to this. That's a specific situation that we need to handle separately. The agreement between the 2 presidents is clearly pointing in the right direction, and hope -- our hope is that this relaxes other situations as well.

Very clear. My next question is -- 2 questions really. But first one on the humanoid, and obviously, very nice to see continued momentum for that business. A lot of investors are asking around the volume implications, let's say, for '26, '27 on the back of these partnerships. I'm not sure if you can give any soft guidance on what we should expect in terms of growth for that start-up from here.

Ross, it's one of the most relevant questions in that ecosystem, how many humanoids will be produced in 2030 or 2035. You have different projections. And again, we are a supplier in this situation. We think about this as a business where we can show our industrialization strengths. So the number of the volume per robot -- sorry, the volume of robots is critical here, as critical as our content per robot. Don't forget there are different types of robots. This is not only one design, but there are several designs.

When you talk to different players, and take David Reger, for example, who is clearly one of the most prominent ones, he normally says 5 million. That's a larger number than what we are expecting at the moment, but it's good to be cautious here. But it's also good to know what you do when this really takes off quicker. But we are at the beginning. It's not that we can show you already numerous volume contracts. But the interest in this and also the interest in Schaeffler as one prominent player who is able to scale is definitely increasing, and that's shown by this contract.

But I'm not in a position to give you an accurate prediction of what will come. That's the nature of the game. But what I can say is we will and want to be prepared for the next year and the year thereafter. I think we'll see more clearly in the next 12 to 24 months. I can also say we are looking at this from the 3 main regions, both U.S., China and NEURA is the main -- the top European player.

Christophe and myself will be in China end of November also to look at our humanoid factory that we're building there, not to produce humanoids, but to deploy humanoids to see how they can help us in production. So this whole ecosystem is emerging. It's a very interesting play for us, and we will stay on top of the development. But I'm not in the position to give you now an accurate number how much robots you will see in 2030. We are cautious, but are prepared for a steeper ramp-up.

I actually have 2 more questions, but I promise to keep these very brief. The first one, actually from an investor, just thinking about the U.S. business for Vehicle Lifetime Solutions, we've seen a bankruptcy in that space with First Brands recently. Do you see that as an opportunity for Schaeffler to potentially gain some market share in the aftermarket tactically?

And then my second question for Christophe on the free cash flow, just a housekeeping question, there is a significant benefit in the third quarter from the Other bucket, a positive EUR 91 million contribution. Could you maybe just give us some breakdown of what's driving that? How much is one-off in nature versus potentially carrying forward into the coming quarters?

I will be brief on the first one. I mean, First Brand is an unfortunate situation, but it doesn't really affect us. I mean, your question was more on M&A type of growth, I would assume. The focus here is clearly on organic growth. Jens is at the moment in Las Vegas for the AAPEX show, a significant potential, and as we said, broadening our spectrum. You saw, I didn't comment on this, in the deck, also the NOx sensor. That's a great example for portfolio extension and tackling the truck and bus part. So I would not think about our growth predominantly being external growth, but internal growth. That doesn't mean that we are not looking at opportunities if they are there, but we will be very careful.

On the cash side, I wish there was an easy answer to this one. It is a very long list of plus and minuses centering around restructuring from one end, incentive payments, payroll and taxes. It's leasing liabilities. Again, I struggle to give you a summary answer, happy to get into details offline after if you wish to, but there's no real one topic that we would point to. If we had to pick one, it maybe around the pension side. But even that, it's only tackling one part of your answer -- of your question.

Okay. Christophe, I mean, maybe it would be interesting just to understand if potentially on the restructuring costs you've sort of guided us to whether those are coming in below expectations, and therefore, you're able to write back some of that free cash flow, if that's an element of this or whether it's really just a big, commingled list of pluses and minuses, as you said.

No, we're not signaling restructuring costs lower than expected. What you do have is some timing issues quarter-over-quarter. I mean, restructuring cash flows, it's as much of an art as it is a science. So we do have some movements quarter-over-quarter from 1 year into another potentially, but no signal so far that there would be less cash outflows related to restructuring.

The next question comes from Michael Punzet from DZ Bank.

I have 1 question on your special items. Maybe you can explain in a bit more detail what you have booked in Q3, especially with regard to the impairments? And maybe you can give us any kind of guidance what we should expect for the full year?

I think it's on the SAP.

The main one in Q3, again, it's the fact that we are moving from an on-premise solution to SAP to a cloud-based solution. So we're not able to apply the same accounting treatment that we would have in the past. So you have EUR 204 million being written off for that topic alone that's flowing through the adjustment line. The other ones are the usual ones that we have had from the previous quarters related to the merger of the 2 companies and the restructuring that come with it. The big ticket item this month for this quarter, it's SAP.

And it's driven by the fact that we're moving into the cloud and that we have to give up the utilization rates that we were assuming so far. That triggers this. It's a little bit of an awkward situation that was heavily discussed with auditors. But it's not a classical impairment in a sense that you have an asset that doesn't function anymore, that doesn't produce value. We are changing here the way we are treating it because we are moving from on-premise what we had so far into the cloud.

This was heavily discussed with our auditors. We are not the only group out there that's facing the situation. I'll just say that the accounting standard there is a very conservative approach to the topic.

Okay. And what should we expect for Q4 or the full year in the overall figures for the special items or one-offs?

For the SAP, there will be a little bit of it, just to close that topic, impacting October. But we are talking single or -- single-digit or low double-digit amount that's done for the rest of the year. For the other topics, again, the usual suspects that you find in every quarter since the merger and the announcement of restructuring programs.

[Operator Instructions] We have a follow-up question coming from Horst Schneider from Bank of America.

I have got follow-up questions. The first one is related to Defense business. We saw this week that the first German auto supplier says he wants to get into drone production. I just want to get an update where you stand on that, if that could be something for you as well. And maybe you can talk about the outlook of your Defense business maybe in that context.

The second one is a follow-up on the Humanoid business. I know you cannot share a lot of details, but could you maybe say, given the order intake that you got so far, where you see the main business potential for you? Is it more in the U.S.? Or is it more in China? Or it's all over the world and you cannot say?

Let me tackle -- take the last one. As I said, we want to play in all the 3 regions that you mentioned. There is a -- the jury is out there who comes with the first volume contract, and you clearly need to define what that is. It's, at the moment, not clear what's happening there. We see the U.S. there with the prominent names probably as the leaders because there is more concentrated on one prominent company. While in China, there are many, many players at the moment, where it's a little bit more difficult to distinguish who are the ones that we maybe should bank on. NEURA is, I think, the most prominent player here.

At the end of the day, of course, this is all depending on the end customer demand. And I can only say this Amazon announcement that was also well received, we need more of these kinds of players to articulate their needs. And that will then flow through the Humanoid OEM and also through the supply chain. I personally think that the U.S. will drive that first phase, and we'll then see significant competition between U.S. and China.

When you go to the 5-year plan, it's obvious that the industrial automation in China is key to the next 5 years in China. There is massive support there. But on the short term, my view is that we will -- we need to watch out for what's happening in the U.S. They will drive it.

Yesterday, when David was here with us, also in the Board meeting, he gave us a little bit more insight. And it looks that the next 1 or 2 years will be decisive on who is going to be ahead. Maybe it's a little bit a statement that is more diplomatic, but we need to see how it unfolds.

In terms of Defense, let me quickly put that in perspective. We have said at the Capital Markets Day, Phase 1, that the basic decision that we want to play in defense or play more in defense is taken also with our shareholders from the family side. We are now in Phase 2. Phase 2 has 3 main deliverables. The one is a more articulated product, sales and also industrialization strategy. Without saying too much detail, we are today in a situation where we are looking at the key opportunities for us, for sure.

Flying objects, let me call it like this, are super interesting because there is scale in that area and there is a product that is needed in particular when you think about high-performing electric motors. That's also where the fact that we are automotive and aerospace helps us. There is opportunity in everything that are vehicles for us. There is opportunity also in some of the high energy weapons. There's also opportunity when you think about spare parts and repair solutions.

So we're looking at focused areas with dedicated customers. We have a lot of calls, a lot of demand, a lot of people that are coming, can you help us with your supply chain experience, also from the start-up side. But we are, at the moment, still in that selection phase. The second phase will last probably until Q1 2026.

What is key then if you want to really turn this into a solid business? You need a structure. You need a legal entity. You need to have the right certification, qualification, in particular, if you want to play at scale. And that's a second key element that we are working on. So all good in that second phase. More to come when we are finished with this phase and have decided where do we really want to play in terms of products and application.

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

Thank you very much. So with this, we would like to close today's call. Thanks to our speakers. Thanks to everyone dialing in for your questions, your interest. And, of course, thanks to the team for the preparation.

As always, if there are additional questions, please reach out to our IR team. And I would already like to draw your attention and block your calendars for January for the CES. The formal invitation to visit us at our booths in Las Vegas will be sent out shortly. I guess you have it on the radar anyhow.

Thank you very much. Have a good rest of the day, and talk to you soon.

Bye-bye. Thanks, everyone.

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

Ladies and gentlemen, welcome to the Pre-Close Call Q3 2025. I'm Moritz, the Chorus Call operator. [Operator Instructions] And the conference is being recorded. [Operator Instructions]

The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Heiko Eber, Head of Investor Relations. Please go ahead, sir.

Good morning, ladies and gentlemen. I'm very happy to welcome you to our today's pre-close call on the third quarter of 2025. Before we move on to the content of today's call, I'm sure that you have all taken notice of our well-known disclaimer. And please note that this release and all the information herein is still unaudited and that our next quiet period will start today after our call.

We are holding this call to remind you of relevant public information previously provided by Schaeffler AG or otherwise available in the market, which may be helpful in assessing the company's financial performance ahead of our Q3 results call on November 4.

After our short presentation, as always, you will have the opportunity to ask questions. And with this, I would directly jump into the content of today's presentation. So looking at some of the key aspects of the third quarter 2025. On our top line, the sales, we see a slight decrease quarter-on-quarter and year-over-year.

I will talk about the reasons for this slight decline once we take a closer look at our 4 divisions. Nevertheless, on the EBIT margin, we see that compared to our last quarter, our EBIT margin is slightly above the midpoint of our full year guidance. So again, a step-up compared to last quarter.

Also very important on the free cash flow, after EUR 27 million in Q2 2025, we see another significant step-up quarter-on-quarter. So if we take a look at our 4 divisions and starting on the left side of the slide with E-Mobility. As you all know, the market environment still remains challenging.

There are positive triggers that should influence the market in a more positive way in the upcoming quarters, like the recently announced subsidiary program in Germany. Nevertheless, for now, the market is still very volatile. As a result of this and since you all know that our sales is mainly impacted by the various launches that we have in front of us and where we are in the ramp-up phase, the sales quarter-on-quarter is rather flattish, slight upside, of course, but overall, well on track.

And as we elaborated during our previous CMD, the main focus for E-Mobility is on a proper project execution since this will be the key not just for now, but also one of the key elements for our journey to reach our breakeven in 2028. On the EBIT margin, we see a further improvement year-over-year and quarter-on-quarter, again, underlining what we presented in detail during our Capital Markets Day.

If we look at Powertrain & Chassis, we see a positive development on the top line in Greater China, which partially compensates for a still soft market in Europe. So China rather strong. Europe still soft, but also here, you know the previous announcement of some of the big OEMs in Europe. And of course, this also has an impact on our top line.

The overall sales decline quarter-on-quarter and year-over-year is nevertheless, strongly driven by our decreasing phaseout business. And also here, this is in line with what we basically explained during the CMD. This is in line with our strategy to phase out business where we see limited growth opportunities and that are diluting our margin.

On the EBIT side, the EBIT margin is higher year-over-year and quarter-on-quarter. And having this said, we are maintaining a double-digit margin hovering around the midpoint of our divisional guidance. Looking at Vehicle Lifetime Solutions, we see that the demand, especially in Americas, Greater China and Asia Pacific continues to be high. Europe, similar to what we have seen on Powertrain & Chassis Europe market rather soft.

So as a result, we see a slight sales decrease quarter-on-quarter, but still higher year-over-year. And again, this higher sales compared to last year is mainly driven by the Americas. On the EBIT side, after a softer Q2, our EBIT margin is up quarter-on-quarter and also year-over-year.

Last but not least, Bearings & Industrial Solutions. Overall market environment continues to be soft, continues to be volatile. Therefore, we see a slight sales decrease quarter-on-quarter and a rather flattish sales development year-over-year.

All in all, this didn't impact us too much on the bottom line. The EBIT margin is higher quarter-on-quarter and also higher year-over-year, and it's in line with our half year 1 performance. So I guess if we look at the overall performance for Bearings & Industrial Solutions compared to last year, we see that our efforts and we summarized it under the umbrella of self-help measures are showing fruits and performance is significantly up compared to last year.

Having this said, and looking at Page #5, we can confirm our guidance for all metrics. We will give more details on the remainder of the year during our scheduled Q3 call on November 4. So before we jump into the Q&A session, just one short notice. After this call, we will distribute our consensus sheet. And as always, we would be very grateful for your contribution to our estimates. And as always, we would be very grateful if we could get these estimates rather sooner than later.

So having this said, let me now hand over to our operator for the first question.

[Operator Instructions] And the first question comes from Christoph Laskawi from Deutsche Bank.

The first one would be on E-Mobility and the environment there. Obviously, you point to flat sales year-over-year. Could you comment on the SOPs and the ramp-ups? Are you currently witnessing delays or just slower volumes in the ramp-ups that you are working on? And is this changing into Q4 with more SOPs to come or relatively unchanged?

And then the second question would be, you already pointed to production shutdowns in Europe. Is there any other changes that you've witnessed Q3 to Q4 now in the current run rate for call-off indications from customers that will point to a weaker Q4 than Q3? And then just technical questions. Any comment on the other line in -- especially on EBIT and on free cash flow, if you want to quantify what does significant mean for you just roughly?

Thanks, Christoph. So let's start with the question on the E-Mob volume development and the launches. So with regards to the volumes, we see a very mixed picture. We have, and I think Thomas mentioned this during the CMD, we have actually projects where the call-offs are higher than the original indicated volumes.

This is mainly true for one of our big customers from Korea, where the launch of the EMR4 is very successful, and we are basically working on getting the capacities adjusted to fulfill the demand. So that's on the positive side. We see -- and that's obviously not a surprise, mainly on the North American OEMs and reduced volume compared to the original estimated numbers.

And I guess the reason for this is very obvious. So overall, for now, we remain confident that we see a volume step-up in Q4. Whether or not this is fully visible in Q4 or we will see the effects then more towards the beginning of next year. Frankly speaking, too early to say.

So far, what we can say is that for the October volumes are in line with our expectations. So no further delays. Overall, this is also true regarding the second part of your question on the overall call-off behavior of our customers. We see that in the overall demand in U.S. is very stable.

We see that the China demand is very stable. In China, you always have a little bit fluctuations due to whether or not government subsidies are running out or are being extended. What we, frankly speaking, cannot say whether or not there are any implications from the latest increasing tensions between the U.S. and China.

So that's too early to say. For now, volumes, volume call-offs with the already mentioned limited or more limited visibility compared to previous days remain on a comparable level. And last but not least, the question with regards to free cash flow. So significant step-up means that our year-to-date cash flow is now hovering around 0, if this is helpful for you.

Very helpful. And just on the other line on EBIT, any comment there or?

It's a lower range, double-digit million amount. Negative, I have to say, sorry, but I guess that was obvious.

Then the next question comes from Horst Schneider from Bank of America.

Just quickly, first question that I have is what strikes me throughout all segments basically that the revenues were quarter-on-quarter flat or down, but the EBIT margin was up. So I think you mentioned for one of the -- or for some of the divisions, why that was. But in general, is that now a trend that we can extrapolate that basically, I don't know, efficiency is increasing and that the EBIT margin also towards Q4 is trending up?

Or what were the reasons specifically in Q3 that we had this picture basically? Was it tariff reimbursements? Or is it different reasons in each segment basically? Maybe you can quickly comment on that. And then I've got a follow-up.

Yes. Thanks, Horst. So let's quickly run through. So on E-Mobility, as I said, it's more or less in line. We -- looking at the -- so sales is more or less in line. Looking at the ramp-up curve that we have envisioned, there is no positive or negative surprise.

Nevertheless, especially on E-Mobility, you know that we are working on our operational excellence. We are working on having launches as flawless as possible. So I guess there, the slight positive development on the EBIT side is mainly due to this, let's say, optimized launch activities.

On the powertrain side, very frank, the top line decrease is something that is fully in line with our strategy. That is to a big extent, driven by the phaseout of the noncore business. And of course, we would wish ourselves a stronger market in Europe, but it is what it is.

And also there, and I think also here, Matthias Zink made it clear during the Capital Markets Day. We are -- and this is true for the entire group. We are not laying back and hoping and praying for volume that will fix all the issues. We are working on productivity programs. We are executing our forward program. We are executing the synergies from the merger.

And therefore, we see that the bottom line is stabilizing. And I think the most prominent example for this is Bearings & Industrial Solutions, where we don't anticipate that the market will fix any issues in the near term. So big focus on the already announced self-help measures, and that should help us to stabilize the margin for this year, targeting towards the midpoint of our full year guidance. And then obviously, the next 2.5 years are very much focused on these productivity measures in order to make our promise come true and double our EBIT until 2028.

Excellent. On free cash flow, I'm not sure if you mentioned that, but what were the drivers for free cash flow? What I have got always in mind from the previous years that we are now running into funny Q4 and then there are some impairments and they can destroy everything again. So my understanding is of free cash flow that the inventories are also under control. And maybe I hope that the risk for impairments in Q4 this time is a little bit more reduced. Would you confirm that?

I would confirm that, yes.

Then the next question comes from Vanessa Jeffriess from Jefferies.

I was wondering, first, can you elaborate on what's driving the more positive China performance in PT&C? And was this anything unexpected? And then one on Bearings & Industrials. Is there anything to be aware of in the fourth quarter in terms of margin? Just otherwise, it seems like the guidance range is a bit low.

Yes. Thanks, Vanessa. No, in China, we basically see that especially the business with commercial vehicles has somehow improved again. That was giving us a bit of a headache over the last quarter. So not yet where it was, not yet where we wanted to be, but stabilizing.

And therefore, also on the margin side, we see that our Powertrain & Chassis is back to where we and obviously, you expect this business to be. On the Bearings & Industrial Solutions, I was wondering that it takes 3 analysts until we come up with this question.

You're right. Our guidance for this year was 5% to 7%. With what I just indicated, it is obvious that after 3 quarters, we are on the upper end or slightly above our full year guidance. At the moment, we don't see that there are any unexpected negative developments. But since we are talking about preliminary numbers here and since we have our Q3 call coming up in 2 weeks' time, I ask you for a little bit of patience. But we will not experience another Q4 for Bearings & Industrial Solutions like we have seen in 2024.

Then the next question comes from Ross MacDonald from Citi.

Lots of good questions there. I've almost exhausted my question bank. Just to circle back on the free cash flow comments. If I understood correctly, for the 9 months to date, you're tracking close to flat or breakeven on free cash flow with the third quarter.

So I mean, obviously, with the guidance being where it is, can you maybe just remind us what the messaging is for the fourth quarter free cash flow, whether there's some room here for a beat on the current guidance or if that could be in scope for a revision also?

On Q4, I think Christoph asked it already, but can you maybe just touch on where we're tracking? I know it's early in the quarter, but where we're tracking at this point on the Q4 group EBIT margins and whether you agree that upper half of the range looks like a sensible assumption here in the fourth quarter also?

And then final one, just some investor interest on this fire at a U.S. aluminum supplier. Just keen to understand if the group has any exposure to that event. I think it's Ford specifically impacted, but if you're seeing a deterioration in the take rates in the U.S. in Q4, specifically on the back of that fire would be very helpful.

Thanks, Ross. So on the free cash flow, and that's a little bit in line with what I just said about bearings. Yes, we are after 9 months now hovering around the breakeven. We are a little bit back-end loaded with our investments. And there, it is very much depending when these orders are finally being placed with the payment terms that we have with our suppliers.

It is, honestly speaking, hard to say which of these necessary capacity increases will still have a cash impact in 2025 and which we will see in 2026. So there is a little bit of uncertainty. We will, for sure, clarify this uncertainty until our Q3 call. But for now, I would say that having 9 months behind us, I can clearly say that we have made significant progress on our inventory management compared to last year. The CapEx is well controlled, and I think it's one of the key focus areas of Klaus Rosenfeld and the management team to have a clever managed CapEx policy.

So for now, no worries that we will see a significant revision of this trend in the Q4. Same is true for EBIT. We have this uncertainty, unfortunately, in our markets lately. Whenever we believe that things are getting stabilized, we realize that there are new uncertainties coming up.

Normally, the root cause of this uncertainty is always based in Washington, D.C. What we can say at the moment, what we see at the moment, looking at the call-off behavior, looking at the execution of our tariff refunds, I have no reason not to believe that the midpoint of our guidance is a good indicator for this year.

And to your last question, yes, very, very unfortunate what we have seen there. I mean it's -- as far as we understand, it's the sole supplier for critical aluminum parts for the F-150 platform. Yes, F-150 is one of the platforms where we have a significant content per vehicle.

At the moment, we have intense discussions with our customer. We know that they are desperately working on backup solutions to at least partially compensate. They are optimizing their capacity that they have for other platforms that are maybe less important also for Ford.

I mean it's a very open secret that the F-150 is the most critical platform for Ford. Therefore, we are aware of the situation. We haven't seen any change in call-offs, whether this is a bank built on the Ford side in order to be ready once they find an alternative solution, too early to say. What we hear is that the problem at the supplier will be around until beginning of next year. So for sure, too long for our customer to remain on the sideline and just watch.

Then the next question comes from Jose Asumendi from JPMorgan.

Just a question on -- when you look back at your budget and assumptions for the year and the transition into the fourth quarter, are you seeing any major one-offs, negative one-offs when you look at Powertrain and E-Mobility? Or were you originally assuming sequential improvement also in Q4 versus Q3?

Yes. Yes. I mean on Powertrain, to be perfectly honest, on Powertrain, we were hoping for a more positive top line for 2025. As you could already see in the first half year, we are more at the lower end of our guidance range with regards to top line development on the PTC side.

Main reason, again, is, unfortunately, Europe. And within Europe, it is the ongoing weakness of 2 big customers, namely Stellantis and Volkswagen that has an impact on the top line. That's why I'm really happy and glad that the team around Matthias Zink is doing an amazing job to compensate these shortfalls with productivity measures and keeping the margin in this double-digit range.

On E-Mobility, it is -- as I said at the beginning, it's a little bit of a mixed picture. We see customers where, obviously, we are fully on track with regards to our planning assumptions. The shortfalls are, again, mostly in the North American area, the volume assumptions that still at the beginning of the year, we had for GM and Ford, for example, are not being met.

But -- and this is maybe a slight positive one. We see that especially those customers are very, very focused on bringing models with range extenders into the market. And as we elaborated during the CMD, this is also a very positive opportunity for us going forward.

And we do have one follow-up question from Horst Schneider from Bank of America.

Yes. One question came into my mind, more housekeeping questions. On special items, I don't know, any indication would be grateful. We do not talk about significant numbers, I know, but just to make the forecast accurate, that would be great.

Honestly, Horst, at the moment, there is really no bigger item in the making. So we expect the rest of the year to be relatively unaffected from onetime effects. We have this big topic of tariffs. We talked about it. It is by now more a rolling event. We saw the negative impact in Q2.

Now Q3, we received the compensation for Q2. Q4, we should receive the compensation for Q3. This is always subject to long-lasting negotiations on part number level. That is a little bit painful. But unfortunately, I have to say we are by now well trained in how to play this game with our customers.

No, I was more referring to restructuring charges, but you say also there were no restructuring charges anymore in Q3.

No, no, no, no. We have the restructuring outflow evenly spread over the year. So there is no one quarter that has a significant peak. I think we have laid out what to expect with regards to restructuring one-offs for the full year. But if you mean whether we are planning to announce additional measures in Q4, that would be a no.

Yes, yes. No, what I just see, I mean, in Q1, we had special items of EUR 14 million. In Q2, it was EUR 39 million. And I think the current consensus also implies that there's more to be booked in H2 '25. So that was more the background of my question, if there are any restructuring charges. But as far as I get you now, there are no restructuring charges. It's more about the outflow of the restructuring that has been initiated before.

Exactly, yes.

Then the next question comes from Sanjay Bhagwani from Citi.

Also just two more left for me. The first one is on the Q4 margins. In the past, Vitesco used to have the margins properly geared to the Q4 because of the reimbursements on the R&D. Can this be significant at the Schaeffler level as well? That's the first question. And the second one is a bit more housekeeping question. Could you please remind us your exposure to Ford, generally, how big this is?

Thanks, Sanjay. So obviously, whatever we do, it's never good enough for the capital markets. During the Vitesco times, you always told us that we should make sure that the reimbursements are more evenly spread over the year, not to have this peak in Q4.

That's what we are doing. So I mean, there are still projects that have due dates at the end of the year, which will then contribute with a slightly higher level of reimbursements. But overall, to be honest, we have taken significant efforts with our customers to make sure that the reimbursements are more evenly spread over the full year to avoid these peaks.

So I would expect Q4 will be a relatively normal quarter with regards to reimbursements. And on Ford, I mean, we don't disclose the relative share of our OEMs. Needless to say, I mean, Ford is a significant OEM. Ford is big when it comes to pickup trucks, which is an important segment for us. So we have an exposure with Ford, but Ford is not within the top 3 of our customers.

So there are no further questions at this time. So I would like to turn the conference back over to Heiko Eber for any closing remarks.

Thank you very much. So I hope you found this call helpful. Thanks for your time. Thanks for your interest. As always, thanks to the team for preparing the documents.

And please keep in mind, November 4, 10:00 CET, our Q3 call. Please keep in mind, we are very, very grateful for your feedback on our consensus. Have a good rest of the day and talk to you soon. Thank you very much.

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

Ladies and gentlemen, welcome to our CMD. Welcome to all of you here in Frankfurt. Thanks for coming, and welcome to everybody who listens on the videos and on the connection. We're excited that so many of you have decided to listen to the Schaeffler story, the story about the Motion Technology company.

We have 3 main objectives for today. I want to explain what that Motion Technology company is all about. We want to outline our strategic ambitions, but also our midterm targets for 2028 and in particular, explain how we want to achieve them. And third, we want to demonstrate to you that this group of executives is a strong team that is fully committed to deliver, to execute and to show that we can form a best-in-class company.

Ladies and gentlemen, times are challenging. You all know this, in particular, in the automotive industry. As you saw, Schaeffler is more than automotive. Schaeffler is at the end of the day, all about technology, best-in-class products, best-in-class manufacturing technology. Technologies that we are able to leverage also for other attractive areas that may be even new to us. And this gives us not only strategic flexibility and resilience, but also strengths and confidence that we can make a difference as Schaeffler Group.

Ladies and gentlemen, let me say again, we're here to win. The world is full of risk, but there's also a lot of opportunity. And we want to go after this opportunity. We, at Schaeffler, we like challenges. We like opportunities. We know where we want to be, and we have a clear plan how to get there. We're certainly committed to execute this plan as a team. Let me say it again, we're here to win.

Now let me dive into my presentation. I have basically 3 messages for you. The first one, I want to explain what this leading Motion Technology company is all about and why the acquisition of Vitesco enabled us to start this transformation. Second, I want to focus on the 3 most important things that I see that are relevant for execution, order book delivery, performance improvement and the management of our business portfolio. And last but not least, I will give the frame for the midterm targets, doubling EBIT, as you heard in the film, and growing our free cash flow significantly.

Let me start with a little bit of history. You all know Schaeffler is nearly 80 years old. It is a company that was formed in '46 by 2 brothers. They started into a global expansion based on their key innovation, the cage-guided needle bearing that is still there today. This cage-guided needle bearing is a result of very hard work on how to manufacture metal or steel at highest precision. And that's a theme that you will find also at the end of my presentation. That is all about long-term view, but also about technology that lasts.

The company has grown through various acquisitions, as you all know, some less, some more spectacular. And we have then, in October 2023, announced the acquisition of Vitesco. With EUR 600 million synergies, but also when you listen carefully with a clear view that this acquisition is a transformational transaction that will change Schaeffler as it was before. We announced on October 1, the finalization of the merger, a very important step for all of you. And then also shortly thereafter, a range of additional structural measures with a headcount reduction program of 4,700 headcounts. And today, we're here for the Capital Markets Day.

The key of this transformational transaction is that we changed our view from being predominantly sector-oriented, automotive versus industrial to a product-oriented view. That is also the fundamental basis for the Leading Motion technology.

That starts with the 4 divisions that we have formed, E-Mobility, Powertrain and Chassis, Vehicle Lifetime Solutions and Bearing and Industrial Solutions. And it is complemented by something that we call the 8 product families. My experience is if you want to present a company, if you want to build a company, it is very important to be able to structure the product spectrum into something that people can understand. And here, you see how we have done it. We start with the classical Schaeffler products, bearing and linear guides into transmission engine components, one of our long-standing product area where we have really very strong market position into electric controls and sensors, actuators, power electronic units, e-motors, e-drives, battery hydrogen and then very important for Jens repair and monitoring services.

This is the fundamental base for them allocating these product areas to the 4 divisions. And you see that some of these product areas are present in more than one division. Actuator as an example, electric controls an examples. It is fair to say that Vitesco did not only close a key strategic gap on the E-Mobility side, it complemented our product offering through power electronics, through ECUs and through sensors in a much broader manner, and we want to make use of that going forward.

If you want to build a company, if you want to drive the motion technology concept, you need a clear structure. And this is a structure we have. We have decided to run this company by division. We run it underneath the divisions by 14 business divisions that you see on this slide.

The typical answer to something like this is this looks like 4 distinct divisions that have nothing to do with each other. And that is different in our case. We see and you have heard that before, Schaeffler not as a conglomerate with 4 independent divisions, but as an integrated technology group with divisions that complement each other.

And for that, we have started to think about what's the best way to explain it. And we have found a way that is quite unique. We're talking about 3 hedges. Let me explain these hedges again for you. The first 2 divisions, Thomas and Matthias, provide a hedge to the company because one is going more into the battery electric development of powertrains. And the other one has still the strong core in ICE that is absolutely necessary to build the future powertrain, in particular, when it comes to hybrid.

So we are hedging ourselves against the development of powertrain solutions across the globe. We are big believers in a diversity of powertrain solutions. We believe that we have not seen the final solution. There will be more and more developments, as you saw from range extenders and other things. And we are perfectly hedged if things come a little bit quicker, the one division will benefit. If things go a little bit slower, the other division will profit as well. So that hedge is fundamental. We call it the ICE versus BEV hedge.

The second one is the hedge that we call build versus repair. It's very simple to understand. The first 2 of our divisions are predominantly OEM divisions. And if people don't buy cars, they tend to repair cars. That's what you see at the moment. You see a significant growth in Jens' division from exactly that logic.

And then there's a third hedge that we call the auto versus non-auto hedge. For sure, Sascha has in his division also automotive bearings, but the predominant part is with nonautomotive. And therefore, you have here sector-wide a hedge that helps us to perform.

These hedges give us, and this is important in our current situation, resilience, but they also help us to become more powerful because the divisions complement each other. Just think about what you can deliver to customers, what you can deliver in a broader sense if the repair division that produces repair solutions is early on involved in how things are developed. That opens up complete new avenues of cooperation.

And we want to use that. But we also want to be ambitious with our targets, and that's why we are proud to say today, we have set ourselves not only midterm targets, but strategic ambitions for the future. We want to become in all our 4 divisions, a top 3 player in the long run. And for sure, E-Mobility, powertrain and chassis go to some extent hand-in-hand because the predominant part of that business, the powertrain business is in the same sector.

That's it for the first part. Motion Technology company, acquisition of Vitesco, a transformational transaction, and we are definitely on track to show that, that concept, in particular, in this environment, makes sense.

But in a challenging environment like this, from my point of view, ladies and gentlemen, it's all about execution. And I'm not talking only about the integration that is necessary, but I'm talking about the effects of that transaction and of the merger with Vitesco and our normal running business. And here, I see as the CEO, 3 top priorities that we want to deliver.

The first one is our order book. Our order book in E-Mobility and PTC. We have a huge order book since the acquisition, and we are determined to deliver that in the best interest of our customers. Order books are always a sign of customer commitment. Order books here and there are complex and operational excellence is absolutely key to make the difference for customers.

The second one is we want to improve our performance. And that means we need to realize the synergies that we promised, EUR 600 million. And on top of that, the EUR 295 million from structural measures that slightly overlap with the synergies.

And the third point is there's room to become less complex. We want to optimize our business portfolio. We want to be very disciplined in how we allocate capital to those areas that will grow and be very disciplined in managing capital across the company. These are the 3 main priorities, ladies and gentlemen, with a clear commitment and full focus on execution.

Let me quickly go to each of these 3 topics and start with the order book. This is the order book as of end of June 2025 in E-Mobility and powertrain. You see that we started end of the year with nearly EUR 72 billion, generated sales of nearly EUR 7 billion, but also generated in the first half new orders of EUR 9 billion in these 2 divisions. That speaks for itself, 1.3x book-to-bill clearly shows that there's growth. What you have not seen so far is the split by powertrain type. It's more or less evenly split for the time being. We're still a little bit more in ICE, but the dominant parts, BEV and HEV will further grow, and Thomas will explain that further.

And it's also well balanced from a regional point of view, 44% in Europe, 24% in the Americas, Greater China, 15%, Asia Pacific, 16% with a clear trend that China is growing further. That's a strong order book that gives us a lot of support for growing in the future. And for me, most importantly, it reflects the strong customer commitment we have as a combined institution.

Let me go to the second point, synergies and structural measures. You know these numbers. We have promised EUR 850 million. I'm going to give you a quick update where we are. By end of June, EUR 81 million of these synergies are more or less realized. You can't see that in P&L. We measure this by the implementation of each of the detailed measures that are behind this, and this is how we calculate this number. The number is growing. We are on the right track. If I look at the numbers by end of August, it's already a 3-digit million number. And we are, for sure, committed to deliver our full target. Most of you remember, we said in 2023, 2/3 of the synergies should be realized and achieved.

Headcount reduction is the flip side for this, always difficult. I think at Schaeffler over the last years, we have developed a way how to do that with least possible friction when you just heard about the latest plant closure announced, no strike, nothing in the press, done very smoothly, and this is how we want to continue this. Also here, we are very well on track with 4,700 target. We want to achieve this year annually 1,900, of which 838 are already realized and a significant number is contracted. So we are moving absolutely in the right direction to deliver on these promises.

If we go to the third point, sorry, let me go one more slide here in terms of what does it mean for footprint. You always need the measurable things. We promised structural measures for 10 German and 5 other European locations, and the closures here are absolutely on track. Berndorf in Austria, Schöffel in the United Kingdom and lately, Steinhagen, that's all going absolutely in the right direction. HR does a great job here to get all of this negotiated. And we think we can say that by the end of this year, all the necessary contracts at the various locations should be finished.

Let me go to the third topic, business portfolio management. Now if you want to manage a large business portfolio like ours, you need 3 things, ladies and gentlemen. First thing, structure and data. This is why I'm showing you this left part of the slide. This is how we have built our business portfolio. 4 plus 1 divisions, 14 business divisions, and then you have 48 portfolio elements and 7 portfolio elements in what we call the other division. That's the fundamental basis how we structure this. And this was ready now. It was not ready half year ago. You need data and certainly also accountability and responsibility.

The second thing you need if you want to manage such a portfolio is a logic. The logic is on the right-hand side of the page. We have with, in particular, the very solid work that Matthias has developed over years, established a logic that we call the 4 plus 1 portfolio strategies, build, grow, harvest, exit and then a turnaround case.

What is that? The build area is simply an area where the new businesses are in. It's typically above-average growth, where Schaeffler value-added is negative. The growth area is above-average growth where Schaeffler value-added is already positive and further growing. Harvest is typically below average growth, but SVA positive and the exit cases are not growing and are also not producing SVA positive returns.

That's simple. We have a logic how we can allocate this to all our business units, and the logic behind that is called earn the right to grow. So if someone wants to get capital for further growth, he needs to be able to demonstrate that he's not able to grow only, but also grow and earn its cost of capital. And that goes further into our capital allocation logic with the reinvestment rate and also the Delta SVA as one of the key yardsticks in judging businesses.

The third thing is discipline. For sure in such a portfolio with all the technologies, with all the great innovation, people want to test new things. But we want to also make sure that at the end of the day, we deliver on our promises, and that needs a clear logic how to do that. We have our portfolio management principles, where we normally say if something does not perform according to plan after 3 years, we need to look at that and then it can become a turnaround case. That can be a build case that was not successful, can also be a harvest case that turns into an exit case where you want to give it another try.

One example here that I want to mention is hydrogen. Some years ago, everyone was super optimistic on hydrogen. We have meanwhile decided that we're not going to further invest into this. We're going to bring it to China where the prospects are much better, but we are basically leaving what we have developed here in Europe for Chinese applications to make the best out of it. But that's one of these examples.

If you see for our 2024 sales, how this 4 plus 1 categories apply to our overall top line, and this, for those of you that know the segment reporting well, does not include the businesses that run off that were still there from the Continental and Vitesco experience. So it's slightly less than EUR 24 billion that is behind this EUR 24 billion number.

Built for sure, is the e-mobility portfolio, as you see here, but also the new things that I will talk about in a minute, humanoid or defense, grow spreads across a variety of business units. Harvest is our classical very strong business that Matthias will present in a moment. We have 10 exit cases in our portfolio at the moment. And just to give you a sense here, these 10 exit cases can either be phaseouts or divestitures where we try to do something in selling these businesses. I could go into more detail. I don't want to do this here, but this is not just a number. It's a detailed list of activities that we are pursuing. I can say some of the sales have already been signed, but they are not closed yet. Some of them are in negotiation, but we are following very carefully this exit strategy.

And for sure, I mentioned turnaround. We have to be flexible and market potential can be different. And therefore, it's always good to have a long-term view on our activities.

Before I go to my third topic, let me add one more page. Order book, synergies and performance improvement portfolio management is one thing, but the real task is to make this company future-proof. And for that, we have to concentrate, and this is our firm joint belief as a Board on two overarching topics. One is sustainability and the other is digitalization, AI.

For sure, for all of you, the hype on sustainability is coming down, but we still believe that it will be relevant, particularly in Europe. We think that it's relevant for customers and we want to play a role here, maybe not as the front runner, but as someone who delivers step-by-step on its promise, in particular when it comes to climate, but also when it comes to circularity as one of the two topics in our sustainability agenda. We see it as our license to operate, and we want to hand over a company to our next generation that is in good shape or the challenges of the future.

And that goes, in particular, also to digitalization, AI. AI is a super important topic. It's very dynamic, generative, agentic, physical AI, you just name it, we want to capture that opportunity not only for the process landscape, but also when it comes to new products and new opportunities. We're definitely on our way to finalize our AI strategy for the next years. That only works if your infrastructure is in good shape. We are about to roll out SAP S/4HANA as the most modern enterprise system. And for sure, we are cooperating, as you know, in the field of digitalization and AI with big names like Microsoft, NVIDIA or AWS.

Let me come to my last chapter, and that's the midterm targets. For sure, Christophe is going to explain that in more detail. I just want to give you a little bit of the thinking behind it. Some of you remember the last year, the last midterm target, it was a complex and complicated set of numbers. We decided this time; we want to make it as simple as possible. We want to be ambitious on the one hand, but also make sure that these targets are achievable. That's why we have concentrated on 3 main KPIs on group level: sales in absolute numbers, EBIT margin on a level of before special items and free cash flow before M&A. And you see here the group numbers, Christophe is going to explain later on the divisional numbers.

EUR 27 billion to EUR 29 billion means that we think that a mid-single-digit organic growth is possible. You can easily calculate yourself. That is something that will need to be looked at against the developments in the various divisions, but it is an achievable number. 6% to 8% is what we said before. We want to double our EBIT in the 3 years to come. And one of the key drivers here, ladies and gentlemen, is the breakeven in e-mobility that Thomas is going to explain.

And for sure, for me, most important, free cash flow. Christophe is going to explain this, the minus EUR 694 million from 2024 includes some one-offs. The EUR 400 million to EUR 600 million still includes some restructuring and integration cash outs. The key here is strict CapEx and working capital discipline. We want to grow, but we want to also use our capital wisely.

This free cash flow number is also important for two other things, for the leverage. The company at the moment, end of June 2025, has a leverage ratio of 2.4x. That is, particularly for me as an ex-banker, too much. It needs to go down into the long-term range that we always articulated, 1.25 to 1.75. For the midterm 2028, we think 1.5 to 2 is achievable.

And certainly, that goes hand-in-hand with dividend payout. You all remember from the past, I always said internal growth should be financed from internal sources. External growth can be financed by debt. Dividends should come out of free cash flow, but in years where you have a lot of restructuring and integration one-offs, that rule needs to be revisited for sure. We want to pay a decent dividend also in the next years, and we know that you are also expecting that. So that's the logic, doubling EBIT and growing free cash flow significantly until 2028.

I could stop here now and say this is it. But ladies and gentlemen, we'd certainly look ahead. We have done something in our strategic dialogue that we have not done before. We have decided to also talk about what's happening in the next 10 years. Because as I said before, the world is full of risk, but it's also full of opportunity. And we want to exploit these new growth opportunities because we know that we have technology, that we have technological competence that others don't have that is needed to conquer some of these new growth areas. And for this, to drive the company in this direction, we have set ourselves a target that by 2035, 10% of our sales should come out of areas that we are not doing business in at the moment. This is the 10% other. And what is that? These are opportunities like the defense sector. These are opportunities like the electric vertical takeoff and lending sector. And these are things like the humanoid that you're all excited about.

This list is not final. But what is final is our determination, our commitment that we want to build a company that is -- has a business portfolio that is even more diversified and that enables us to generate value from the application of our core technology. So you can see all of this as an option for the future, and you know better than I do, what option value is all about.

Now let me come to one more slide before I hand over to Thomas to explain that in one example. The famous humanoid robotics. Humanoid for sure is an interesting proof point for our strategy and for our ambition to become the motion technology company. Why is that? This humanoid robotic ecosystem that is emerging is driven by the megatrends that we are experiencing at the moment, AI, industrial automation and also the demographic change.

It is, for sure, a potential new growth sector that is at the beginning of its development, and it's a sector where we think we have all the necessary ingredients to play and not only to play, but to play to win. Humanoid robot makers, as you all know, are either start-ups or major automotive players, both in the U.S., Tesla, well known to all of you, or in China.

Humanoid robot makers can only succeed with a solid supply chain. It's inconceivable that in particular, the start-ups, but also the bigger ones will build complete own supply chains. And they need products that enable motion. Just think about the humanoid. This is not the classical industrial robot that does 100 times a day this. This is a system; it's something that moves in very high precision. And that's exactly our core technology. For high precision, you need specific production and manufacturing technology that also allows you to scale things. This is exactly what we have been doing since decades. This is our forming technology, our deep draw technology that Schaeffler has perfectionized over years.

This is the reason why we think, together with Vitesco where, in particular, the product families come into play and where we have much more focus on actuation, actuation in a sense that you combine linear or rotative elements with a strain wave gear, with an electric motor, with maybe a sensor or even power electronics, as you see on this page, this is exactly our product know-how. And from our point of view, it is a promising situation at the moment where we have what people need and where we can make a difference if we deliver that well.

For sure, this ecosystem is emerging. It's not final yet, but we think there is high market potential. If you think about content per humanoid, it's a similar calculation like in cars. However, the content relative to what is important for us is much higher in humanoids than in cars. 50% of what a humanoid is all about comes from actuation, and that's exactly where we can make a difference.

I'll leave the rest of the topic for your questions and would like to sum up. Here are my three core messages. We are on our way to create the leading motion technology company. We will focus on execution with 3 things: order book delivery, performance improvement and a very active business portfolio management. And we're absolutely determined to deliver on our midterm targets, doubling EBIT and growing our free cash flow significantly.

Thank you very much. I now hand over to Thomas for the next presentation.

Thank you very much, Klaus. So you have heard from our CEO our strategic ambition. A big advantage as a CEO, you can rely on your 4 divisions that they will execute this strategy. And it is my pleasure to introduce our next two speakers.

Let me start with Thomas Stierle. Thomas began his career at Siemens and Siemens Video with global leadership roles in advanced -- in ADAS and actuator technologies at Continental. Before he finally took over the responsibility for the key business units, electrification and electronic controls. In 2021, Thomas has become a part of the Vitesco Technologies' Executive Board. And since October 2024, he is driving innovation and sustainable mobility at our E-Mobility division.

Following Thomas, Matthias Zink will elaborate on the future of our powertrain and chassis division. Mathias began his career at LuK. After international assignments, and leading key divisions within Schaeffler, he became the CEO of Schaeffler's Automotive Technologies in 2017. Since October 2024, Matthias is heading our Powertrain and Chassis division. In addition, he also is the President of CLEPA, the European Association of Automotive Suppliers.

So since I know that Thomas can't wait to share more, the stage is yours.

Thank you very much, Heiko, for the introduction. And yes, also a warm welcome from my side, dear guests and also to the viewers stream online. E-mobility, division E-mobility. My story actually is pretty short if you want to bring it. The market is still intact. Transformation is going on. Yes, there are some volatility, there are some uncertainty. But if you have the right answers to those challenges, you can make it in that market. And especially now that we are a joint company bringing two complement portfolios together, we have the opportunities to build the success story on it. But at the end, it is also all about execution. We heard that from the CEO and delivering. And clearly, as our ambition to be a top player in this market, we have to also improve our profitability. And there, we have set our target to '28.

And talking about target, it's not just a top-down target. There is a plan behind, and I will give you today some glimpse about this. Before I go in there, I would like to start with the actual numbers, EUR 4.3 billion, we are already in this division in 2024. And if you allow me to share with you, when I started E-Mobility activities back in 2018, the E-Mobility business that I took over was less than EUR 400 million. Profitability was also a challenge. All I want to say is managing growth, handling growth, increasing profitability has been my business for the last years. And now in this joint company, it will continue, and we have the right recipes, and I will share with you in the next 20 minutes how.

Let's quickly look at the organization, and I would like to focus on the right side because when you bring these two complement companies together, the question is how you do it. And we clearly went after technology, as you can see. So on the left side, you see the electric drive. So everything around a motor, but also the systems, the hybrid system, the e-axle systems. In the middle is all about our software, electronics, power electronics, charging systems; and on the right side, all about thermal management, but also components, which actually we are using in the other product groups.

And one driver besides the technological proximetry has also been business continuity because both companies, they came already with a strong order book and project execution. And maybe some of you remember in the interaction I had with you; I talked in the recent years always about project execution. And when you bring this together and it was really excited because the team getting the competencies, which they did not have before were really exciting, but we had to make sure that we are running the project towards the customer and to the company's expectation. And out of this, we had to make sure we are not interfering too much, and that is the setup we are going forward.

When you look at our distribution, you see 50% Europe, but we have published our book-to-bill ratio. And there you see that China is by far the strongest order book, and I will talk about this sooner. So clearly, the share in China will go up.

Now when we are looking at the market, and of course, you can look at all kinds of analysis and so on. But what I wanted to show you with the left side here, the market is intact, and it is moving towards electrification. And while you see on the right side, there are different dynamics. And clearly, China is the leading market in that transformation. Meanwhile, in my opinion, also becoming more and more the gravity of the automotive industry.

The other markets are also progressing, yes, with different pace, yes, with certain uncertainty in terms of what architecture coming from a pure battery electric vehicle, range extender, plug-in hybrids, full hybrids, mild hybrids and so on, but it's happening. And I will -- or we -- I believe strongly in order in this uncertain market in terms of where is the distribution, let's say, which models will prevail, which win, how you set up your portfolio, how you drive your product solutions towards, that will give you robustness. That will give you resilience in those uncertainties. And I will show you with some examples how we and Schaeffler are driving this forward.

Clearly, when China is the main market, you need to have a strong standing in this market. And I will share you also where we are and how we are moving forward. And what we are doing to compete in this environment and to win in this environment. And just two days ago, the CEO of China of a major global player basically said, if you make it in China, you will make it globally. And if you allow me, that's something we are discussing in our company for more than 2 years, we call it. If you win in China, you will win globally. And that is exactly how we are driving this forward. And so far, we have a very strong order book. You saw it with EUR 43 billion. So that is a good foundation to drive this forward to further generate scale. But there's also the challenge, execution, we heard that, and that is something which also drives us forward in order -- towards our breakeven.

Now on the left side, a little bit glimpse on the product portfolio. You see the similar classification as in the organization. And clearly, we are driving our portfolio to be used technology-wise, in each kind of architectures. And that is important because of that uncertainty, because of you need to have that flexibility in order to see where, let's say, the winning architectures will be, how the consumers are adopting to it, how they're accepting it. And that is, in my opinion, what you need today in order to drive forward. And that's exactly how we built up. Now I don't want to claim that if you have one product solution, you can use it 1:1, in the -- let's say, in the hybrid. But there is clearly the base technology, and I will show you some examples.

What you see on the right side, that is the addressable content for architecture. And there you see when you find a way using the technology for those architectures independent on those, you are, by nature, flexible towards those, let's say, winners or hesitations. And that is the message I wanted to give, and that is how we are looking at the market and that is how we are setting up our product portfolio.

Now every -- we talk now a lot about modularity. And I want to show you one example. That is how we are driving this portfolio forward. And when you see this from the left to the right, is -- there is no -- let's say, the logic is that if you understand system, if you understand architectures, and that is what we have done because we have more than a decade experience in this area. We have now and we are showing it in the back, you can see our fourth generation of e-axle. So we know how to build this. We're understanding the market, and we can build from that knowledge down to components in order to serve multiple solutions, to serve our customers in the different regions, to serve also in their strategies on how much they are insourcing or building in-house or not.

And out of this, these pictures are not just an example. These pictures are concrete projects, which we are having in production with our customers. And there are even one customer who uses, for instance, these subcomponent as a power module. And the same customer, we are providing a full e-axle depending on what his strategy is in terms of platform A, B or C. And with that competence, that is what our customers are valuing with us, because we can supporting them in their strategies. And sometimes, we even starting with a component, and they are seeing the value they're having with us, they're seeing also the competitiveness we can bring. And then later, it turns out to become a more system. And we are open to that. We are not focusing on a system only. And this is just one example. All these product routes, we are driving in this philosophy.

And then within the part, so -- and here, I take an example with the inverter. Now once you understand the market and you have this interaction with the customers, then you can build the right solution in a way that you can flexible, adapt or address the different use cases. And especially here, the power module or the inverter is a very good example because also that is where we started many years ago in order to drive it in this direction.

And I take a lot of pride that we can use one production line and can serving all these customers in the different regions with the same technology. And there, you understand quickly, independent on how the market develops or certain platforms, you still can utilize the investments you have done. And yes, of course, it's not 100% ideal, but you see we are achieving 80% reuse capability and such that you can also, even from a geopolitical side, localization, you drive this depending on how the business develops. Staggered investment is here the key.

Now I also want to be honest, on the inverter, that is really where we have, in my opinion, mastered that. We are not so good in other areas, but that is the philosophy which we are driving this portfolio to. And you can imagine when you bring two companies together, of course, now we have to bring it together. And that is really our focus because this flexibility, scalability, modularity, that is what drives or what helps us being flexible and being responsive to the market and to the customer needs.

One thing. Maybe some of you might remember, I showed that in my last Capital Markets Day, maybe you remember, that came from frame module. Meanwhile, it's going in this direction. And you might have said, hey, it looks the same. And maybe for you, the most important parameter difference between this is 20% less expensive. And I'm happy to explain that a little bit later for you, if you like, back there, we have that show.

Now China. China, I mean, I showed you how, let's say, important that market is, especially for the E-Mobility. I mean it's driving. It's the penetration. It's a whole ecosystem, which is very much geared towards speed, cost competitiveness, but even meanwhile also the liability. And actually, I take a lot of pride that already many years or many 3 years ago, we had -- we started focusing on that market in terms of giving the teams more autonomy, more empowerment, more let's say, freedom to drive solutions to drive innovations forward.

And I'm very proud today that, that is really taking traction. And you have seen this with our book-to-bill ratio, which we have shown. And as towards August, out of our EUR 5 billion order intake, 40% is coming from China. And out of this, already 80% with Chinese OEMs. And we are focusing on the top 10 Chinese OEMs. And you see we have already in production today with 7, but in the order book, we have [Audio Gap] Chinese [Audio Gap] OEMs, they all want to go global.

Now guess what? They are happy to have a partner already in the China market, which can easily can go globally. And this is the main discussion point these days. And that is why I'm so happy about the success we are making because that will help me -- remember what I said earlier, if you win in China, you will win globally. And now I put one highlight there, which is actually I'm very proud of because that has been a customer, let's say, doing a lot of activities themselves. It's actually the leading NEV provider in China, and we broke it with a gearbox now recently, and we are starting more and more discussing more business. And I'm very happy and also very proud of this.

And why -- when I say winning in China, meaning winning globally, we see already that with the speed we can there -- that we can do there, we are now also a good solution for the rest of world. So the strategy is paying off. So we are providing already solutions outside of China's customer out of China and themselves, or we're bringing in these solutions to the regions the customers in, in order to support them for the localization.

Now a word on the order book. And there, you find, let's say, structured our business fields, also a little bit the organization I had earlier. And when you look at how the order book is distributed, and that shows, in my opinion, also the power that this division has in terms of providing E-Mobility solutions is pretty balanced. And yes, on the thermal management, the value is not so strong. But also here, we have multiple projects globally. And now really, my focus is to the execution of this order book, executing it, bringing into the production to the expectations from the customer, but also to the expectations of the company.

At the end, we want to achieve -- based on this execution, we want to achieve the breakeven in 2028. And there are 4 major levers, which I would like to touch in the last 5 minutes on. And of course, one portion is the growth itself. It's the scale you generate with that, and you can do. But at the end, it is -- as I mentioned, it is then the execution, which we have to do in order to bring that expectation up and then feeding into our improvement of profitability.

And I want to give you some glimpse. At the moment, I'm in 18 launches right now, over 11 plants globally and 14 more to come. So you can imagine the stress level, you can imagine, let's say, the challenge. On the other hand, we have experienced now already also even very complex products like e-axles or complex X1 boxes. That is something which we are having experience collected and we are executing this. There are still things which we are learning, and that is how we are improving step by step. And at the end, that is also helping us improving our development and industrialization time.

As I mentioned, in China, we are not doing projects anymore longer than 12 months. And you can imagine for a company like us, what kind of challenge this has been based on our processes. But nevertheless, here again, with the collaboration on our Chinese team being in this ecosystem, we found ways and we found solutions which we are bringing now globally.

Operational excellence, of course, next to the growth itself and managing it, there is further activities, especially design to cost, pushing this platform approach, this modularity, which I showed, that is something which really is driving us forward and has also a significant contribution. And you will see later in the CFO section some numbers attached to that.

R&D efficiency. What here, the focus is -- and you know Klaus touched on the structural programs. So there are out of this gravity shift globally, of course, we have to adapt to it. And that will also contribute to have a contribution in the R&D, and we are in the middle of it. So that is something, which also drives forward the improvement. But besides the capacity adaptation and besides, let's say, the balance globally in terms of our R&D activities, one topic which is driving us a lot, and there are actually multiple examples where we are driving efficiency improvements is by virtualization of our design. So we are going more and more into the digital world in terms of digital the design, virtual testing.

Today, we are not writing code anymore. It's all auto generated. We are using agents and generative AI for our specification analysis and first proposals for design. So there's a lot of opportunities there to get better, and that is all part of the program R&D efficiency.

And I touched very at the beginning on the organization where there was a strong focus on business continuity on making sure that the projects we are running are, let's say, smoothness continuing through the merger. But out of this, there are further opportunities to improve, to gain synergies out of the merger, which now step-by-step, we will implement and such, there is also a contribution on a leaner overhead structure within the division towards the breakeven.

So we talked a lot about the breakeven, and I wanted to reemphasize, there is a strong commitment by myself, by my team to achieve it. And again, it's not just a target which we're setting, there is a concrete plan behind which we have to now execute. And along the way, of course, we have to manage the influences coming. And with that strong order book, you see strong growth ahead of us. But as I mentioned, meanwhile, we have good experience how to manage that. And here, it's also about the execution. And with that, we will contribute to the overall improvements of the company.

That was all about E-Mobility, and I'm quite sure you are interested to hear now from Matthias about your midterm targets and strategies on Powertrain and Chassis. Thank you very much.

So good day, good afternoon, and a heartfelt welcome to all of you, whether here live or in the live streams.

So I want to talk about the PTC, so the second element on the former automotive business. And I want to start with a firm and strong statement. So we are the division who preserves margin and cash flow. You see the EBIT with 11.4% in 2024. We are on course, on track in '25, and we commit as well to nearly the same value or the same corridor going forward.

We're going to do that or to underline the promise with strong products. So they are positioned to not only keep but as well to grow the market share. And there, we have some great additions as well from the former Vitesco. That portfolio, we manage very actively, Klaus said that with a very strict and disciplined capital allocation, but as well with a strong portfolio management. And hence, with that, I'm very certain and sure that we have a robust road map and measures in place to, as said, preserve margin and cash flow.

How does PTC look like after the addition of Vitesco? So we did add here a value of EUR 5 billion turnover. You see that in the upper left pie chart, very strong portfolio. It's a good mix of being complementary, of being synergetic and even partially agnostic. And all in all, we have a pretty balanced global setup. Yes, a bit heavy still in Europe, but a strong footprint in China. Similar to Thomas, we have more than 60% with Chinese locals. We have a very strong footprint in the Americas and so have in Asia Pacific, mainly in India to support the growth or the relocation of our customers.

Now I said it's synergetic, it's complementary and partially agnostic. What do I mean with that? 2 examples. And some of them, you can later on look yourself at the little exhibition we have here and many discussions we had last week with customers at the IAA, even on the combustion engine. If you imagine a combustion engine next generation, and there are customers talking about the next-generation gasoline engine on range extenders or hybrid, it's all about efficiency. It's all about emissions. And there, we have the best portfolio among all the competitors.

It starts with the ECU. It continues with sensors, valve train technology, damper technology and even sensors for flex fuels or emission, all this you can now buy in Schaeffler. I guess there is, as I said, no other competitor out there with that portfolio, with that engineering, with that kind of global setup. So I call it a really enriched portfolio after the merger. So it's more than 1 plus 1.

The same holds true for the business field chassis and body. That's the agnostic part of it. There, we participate the developments for autonomous driving for x-by-wire, mainly steer-by-wire, but as well some new products we have added with Vitesco here to sensors like the hands-free access sensor for trunk -- frunk or door handle. That's a very interesting product with an interesting growth rate.

Now, let me elaborate on 2 or 3 products where we have really stars where we are the absolute market leader. That's -- the one is on the drivetrain technology, the tore converter, the dual mass flywheel and the NOx sensor. Those products, we have market shares above 70%. Usually, you say you should not have as much market share. But with all the IPs we have with the production technologies, with a strong engineering, it's very hard for our competitors to outpace us there. And there we have partially since decades, this strong position. And for sure, we are highly committed to keep that where it is.

We are well prepared for dry cars. So what I'm saying with that is for non-hydraulics anymore for power steering with electric power packs and for x-by-wire drive. So that mechanical part the ball screw drives, that's as well a star product in Schaeffler, very global locally, meanwhile, in China, locally in Mexico and here in Europe with every carmaker, in particular, that's one of the products for the new starters on the battery electric vehicles.

And last not the least, I already indicated those products for vehicle access, completely new to Schaeffler. I've even been a little bit surprised when this entered our place from Vitesco, but a great business, more than EUR 100 million already and a double-digit growth rate. And I'm not sure how many of your vehicles already have the technology. Next level is to come. That's with the ultra-wide band and then opening the door with a mobile phone, you will not need any key anymore. And there, Schaeffler is the market leader.

Now what helps us and who we are and what is our value proposition to the customer. I guess, where we have a great reference is this global footprint, what the Schaeffler brothers started to develop 80 years ago. So we are in every country, the customer wants us or meanwhile, even needs us to be with all the geopolitical challenges. So we have very high value adds in those countries, 95% plus. Not saying we are completely independent of the hiccups, but we are very resilient, and we have not only execution of things in those countries. We have R&D footprint. We have industrialization and a very high vertical integration. And that's something, Thomas, where you and I collaborate very, very closely on realizing these launches.

And that's a sort of benefit if you talk to a customer, whether you are ready to localize E-Mobility in India, yes, we are because we are there since 60 years with a great and strong presence of our teams. So it is in Brazil, Mexico, America, China, you name it. That's definitely an asset.

Quality, we have a great reputation. We support our customers when they now go in their new footprints in India and other countries. Same discussion I had last week at the IAA. Many asked, give me your brochure, how present are you in those countries because I'm going to relocate or increase my production quota there.

And last not the least, yes, we're going to preserve margin, but that doesn't mean we are not innovative anymore. The opposite is true. So we're going to continue to develop ideas and products, but always based on that foundation and always very disciplined.

Now adding that thought to this pyramid where we as well are always working on this component and system level. That's more or less the key to success with our customers. So we can talk on a system level, but we can deliver down to the component level. We are known as a very competent engineering company. And we are at the same time known as the company who makes things happen.

In Germany, I would say [Foreign Language] is one of our primary virtues, so realization of things, but as well taking challenging products with unique technologies. And with that, we are not only continuing to focus on the pass car sector. I guess that's as well a nice addition when we added the Vitesco portfolio, we added as well the sector portfolio of them. And with that, we have a much better access on the 2-wheeler market and so have we, with a lot of sensorics and other products and ECUs to the truck market. That makes Schaeffler definitely a stronger company.

Now while you listen to Klaus Rosenfeld, he talked about this capital discipline, that's something we developed over the years under his leadership. I tell you that, that had to be disciplined, and we practice that a lot together. But meanwhile, it's a standard process. We apply that for all our activities. And I just want to give you a little overview how we run that in PTC and respectively, in whole Schaeffler in future.

So we're exactly working along these 4 segments or these 4 clusters. And there you see, yes, my main business as PTC CEO is the harvest, but not only we take the liberty or respectively, combined with discipline to grow. We take the liberty to build. But yes, as well, we exit business where we say there is no projection, no perspective, no future anymore. This is going well. This is a well-established process. And I guess that's as well the key to success in times of transformation to not stick to products you love, but you can't sell any longer and the other way around to really be on a harvest mode, very disciplined to finance the one or the other build or grow activity.

And I just want to give you a little glimpse on 3 examples. The one is what I already said before, it's not only harvesting this dual mass flywheel or torque converter. Those will be in the engines or hybrid topologies of the future anyway, and we are well set there on the other side from that basis on. We actually have great developments with customer for powertrains and hybrids up to or down to Kei cars of Japanese customers, where Schaeffler is the only one who can develop solutions for these tight spaces. And that combined with the electrification part of Thomas makes us more or less a unique seller or unique selling company on those products.

And I think for the next probably 1 or 2 decades, we're going to see more of these challenging solution, great opportunity for us, needs a lot of customer trust and proximity, but that's what our teams in the market and in the R&D departments stand for.

Second goes a bit into this other sector on the 2-wheeler. I said it, Schaeffler has been active in 2-wheeler, mainly with bearings or bushes for 2-wheelers. We now have engine control units. We have injectors. We have exhaust sensors. We have electrical control units and electro motors in even a JV, a little one in India for 48-volt drives. So there is all of a sudden a whole portfolio now merging this literally with our good customer access we had. We are in a position to serve from Harley-Davidson via TVS in India down to Japan, Kawasaki, Yamaha, all those customers are on our list, and we can as well there, make E-Mobility and partially even hybridization happen on powertrains of 2-wheelers.

Similarly, this chassis body, that's something you can as well experience later at the exhibit. I'm completely convinced that the car of the future will look different when all these functionalities towards autonomous come in place when you do no longer have -- to have your hands on the steering wheel, when this automated parking and lane assist and all those topics will have even more momentum, then there will see x-by-wire technology. And now with the Vitesco on board, we have sensors, we have power packs, we have BLDC motors, so brushless, low-voltage motors, all that portfolio is in place. By that, we have now all the vertical value add and the opportunity to be much more competitive, to be much more innovative, and we have the access to all these different technology.

That's nothing to be honest, I expected in the powertrain business. That's a great addition in this portfolio. That's how we right now set up the PTC organization, always in very line with how Thomas is running his business, high-voltage, low-voltage motors and so plenty of synergies we grasp there. And that's really a very, very interesting portfolio as well in the division who is about to harvest and to preserve margin and cash flow.

With that, I would close that part here. Once again, the commitment stands. You're going to see that later as well in Christophe's our numbers, he's going to present. We will be the long-term -- the long-term deliver on EBIT and margin, you see the corridor here. Sales is going to be flat because we phase out business, but I'm a firm believer that these new grow and build fields will even drive us into the midterm future.

Thanks a lot. Happy to all listen, looking forward to your questions. Thank you.

Thank you very much, Matthias. Thank you very much, Thomas. As you can see, the colleagues are changing the setup on stage. I'm in their way. Basically, means we are ready for our first round of Q&A. So I would ask Klaus, Thomas and Matthias back on stage.

Before we start, please keep in mind the presentations for Vehicle Lifetime Solutions, Bearings and Industrial Solutions and our CFO update are yet to come. So I would be grateful if you could focus your questions on the three presentations.

So first.

Horst Schneider from Bank of America. First question that I have is what I missed on the slide. It was assumption on light vehicle production growth, what you assume is it the classic 1% to 2% growth? And then also, I mean, I know, especially for E-Mob, it's difficult to say how much you want to outperform the market because it depends more on the general growth of EVs and PHEVs. But yes, for PTC, maybe you could say what is your assumption on outperformance? Or is there rather an underperformance.

The second question is on E-Mobility. It strikes me there is no range, right? For the other segments, you have got a range. And here, you have got revenue range, but not a margin range on the upside. So therefore, I want to understand basically, is that the absolute minimum you want to achieve the 0%? And what is then the catalyst on the upside that it could be also more. So just that we get an understanding or better feeling if the targets are conservative or not. I'll leave it at these 2 questions for now.

Thank you. So Matthias, you would like to take the...

Maybe I'll start with the PTC/S&P part also. So we assume more or less the S&P data or the former IHS data in the vehicle park or car parc growth. So as we see the EUR 90 million this year, so this flat growth, as you said, there is no fantasy, but as well no conservatism in. We rely Klaus or overarching with the BDM team on that number.

Outperformance, it's a very fair question. We do outperform, but it's a multiparameter thing here. We are letting go a business like the turbocharger and others, you saw that. So some business fields we are letting go. If we focus on the remaining business fields, we are less declining on our ICE content as the ICE part is declining. That's because we see that already, and we assume that going forward in our multiyear assumptions that we get businesses of our competitors. That already started because we have been believing in combustion engine, at least this higher technology part on valve train and others, and that's the assumption. So yes, there is an outperformance while the market is declining for ICE.

But do you not want to specify by how much?

We could. We have the number, I guess, but by purpose because talking in a declining market on an outperformance, somehow a bit counterintuitive, but we have the number we could share.

Because at the moment, you underperform, right? You see that every quarter, So when does underperformance turn into an outperformance?

Because we're actually letting go more than EUR 600 million and this like -- like thing is difficult with the turbocharger and others. We would have to clean up the numbers and then state or elaborate on that. But we can come up with that number. That's there. Again, the assumption is we're taking competitors' business and with that we outperform.

Thomas, you would like to add to the breakeven.

Yes. I mean for us, clearly, the breakeven itself is, let's say, the major target. While we are not giving a range because we wanted to also give it a highlight. We have to see when it comes closer because there is -- and you see this also in the -- even in the guidance today, there's a big spread there because it's difficult to predict, especially so far out there. But I also would like to say that at that time, still, let's say, reimbursements and R&D spending is a major contributor, and that somehow, we can also, let's say, steer in terms of where do we invest. And out of this, we wanted to -- or at least I want to have some freedom. So that's why I'm sticking to the greater breakeven.

The last question that I have is when we compare revenue targets, E-Mob versus PTC. We see that E-Mob is targeted to generate more revenues than PTC, but the margin is 0 and PTC margin is 10% to 12%. I think it has got to do with D&A as well. But if you have got a 2035 ambition, when is E-Mob targeted to take over PTC in terms of profitability, or is it in general, a less profitable business?

Maybe I answer the question. I think it's fair to say that in businesses that Matthias run, where you have decade-long experience and very dominant market positions, you showed the classical chassis products from the past, you can generate margins that you cannot generate in a highly competitive business, in particular, with the China angle that Thomas has run.

I think it's inconceivable even beyond 2035 to go to something that is -- has that margin profile. So when you combine the two things, I think we will end up with a decent margin for our powertrain supplier in 2028. That is somewhere in the typical range, somewhere between 4% to 6% if you combine the two. What happens thereafter remains to be seen. But there is a structural difference between these two businesses because we have at least at the moment, not comparable dominant positions that we have in ICE.

Jose, I think you were next, right?

Jose from JPMorgan. Maybe, Thomas, to kick it off with you back again to this path to breakeven. Should we think about top line or cost-cutting measures that is really ensuring the breakeven level? And then what is the ultimate sort of margin potential of this division when we take all the products that are within the division longer term? How do we think about that margin potential?

And then, Klaus, back to you. If you compare the previous CMD to this one, which structural measures have you taken to ensure the company delivers these financial targets in the medium term? Which changes have you done strategically in the company? And also from a free cash flow perspective, what are you reinforcing within the company in the next 2 to 3 years to ensure also the free cash generation of the company? I'm aware we have to go through a few more presentations as well, which will address this topic, but maybe you can just give us also your view.

Thank you, Jose. Thomas, you would like to take the first one.

Yes. I mean, Jose, you remember, we discussed it a few times, let's say, the balance, how much you invest, how much growth you can generate versus the profitability. And clearly, I mean, as it has been in the past, I want to bring this business to a, let's say, self-funding position. And that is the main focus.

When it comes then to, let's say, being selective or where do we bid and not, I mean, I don't know how much time you give me, Heiko, here, but let me try to keep -- we are looking how does it fit into our portfolio based on the, let's say, platform. And if it doesn't fit, then tendency is to say we are not bidding or we are asking customers to participate. So that's how we are driving it.

And out of this, maybe you saw, I didn't emphasize it because of the time, but 80% of our midterm target is already in our books, yes? So there is upside potential. But again, we have to manage this versus the cost spending to acquire it. And out of this, the profitability improvement is the higher priority and that fits then to our plan, which we communicated today. But nevertheless, if, let's say, our platforms, which we are providing are finding more traction in the market than what we are seeing right now, there is upside potential.

On your structural question, I think Christophe is going to explain more on the drivers, but what is different than last Capital Markets Day that is way behind us, this is now a completely different company. It's a bigger company. It has a much broader product spectrum. But the key sort of beliefs, and Matthias talked about this are still the same.

We are not managing this company by EBIT margin. We're managing it by Schaeffler value added. And that may also add to the point that was just made. If you have a capital-light business, you have different margin profiles, if you have a capital-intensive business. And therefore, just comparing things that are not equal on -- only on margin level is not how we do it. So strict focus on Schaeffler value-added and free cash flow generation has not changed and will not change. This is also part of our personal compensation on board level.

The idea that you need a structured portfolio where you can compare things where you have the right data, that is certainly now more articulated than what we had in the past, also with a broader spectrum. The idea of accountability is also nothing new, but also very important to us. We want to make sure that we have the right persons on the right jobs. And now with a stronger team with the Vitesco colleagues coming, I feel very good that the general sort of framework is applicable to this new company. And if we drive this now forward with this in mind, I think we can also make a difference compared to others.

Free cash flow is critical in the next 3 years because that's the main driver for our dividend and also for deleveraging the company.

Michael, I know you're a gentleman. So ladies first, right?

Vanessa Jeffriess from Jefferies. Just Thomas first, maybe on just the mix of the E-Mobility margin. So I think at the moment, 1/3 of it is already making kind of mid-single-digit margins, is that right? And then the rest is significantly loss-making. How do you expect that mix to change by 2028? Are you going to bring it all up to breakeven? Or do you think there will still be parts that are loss making?

No, I mean you saw -- well, the answer is I want to bring this on all. And you saw the distribution on the order book, so it has to be. And of course, let's say, in certain areas, you might have a stronger position, but this is more single-digit difference is and maybe more out of the execution, how well and so on. So clearly -- and you heard Klaus with the SVA positive, and maybe remember the chart he showed with the business units and that really each business even below, we are asking or we are managing each business field to contribute SVA positive. So out of this, it will be across the board.

And then you said about 80% of business is already being awarded for the 2028 book. I guess we know from the last couple of years that some of that business has been very volatile. Some of your competitors have seen massive cancellations, et cetera. How do you think about the volatility that you're seeing at the moment?

Yes. I mean, first of all, when we are taking orders in, in our order book, we are already doing some discount. And there is no, let's say, no lawnmower. So we are really looking customer, what kind of experience do we have, platforms? Is this a platform which we believe will succeed. So that is how we are managing, let's say, the downward risk. And then there are still, let's say, uncertainty, and we have seen this.

But actually, I showed with you that because I have also projects which are running better than planned. So out of this overall conservative out of the experience. And then in between these, let's say, up and downs, which then equal out. So -- but of course, honestly, that's our plan. We believe it's a conservative plan. That's why the 80% is already booked and so on. And then we have to manage with the changes. But even if those changes are coming, then, of course, we are asked -- and that's a running process actually for quite some time now. We are asking our customer to compensate and that at least to limit the damage.

And then, Klaus, just on the group targets, I mean, I appreciate the simplicity versus last time. One thing I would say is different is the absence of return on capital employed target. So maybe if you could comment on a number or any general thoughts?

Well, we have agreed that we keep it simple, as I said. And -- if you have the top line, if you have the EBIT margin, if you have an idea of cost of capital and see what's happening with your projections, I think you will be able to do this. But if you want to achieve targets and break them down, I think it's better to concentrate on the 3 ones and make it too complex. So that's the reason why we decided against it. But I think you have the parameters also in terms of dividend payout, in terms of leverage, how to model that properly. And we're going to help you with capital employed if that's necessary.

Thank you. Christoph?

Christoph Laskawi from Deutsche Bank. The first one would be on PTC. You've shown around 19% of the business is currently in the exit phase. Could you share a comment on how that looks in '28? Are you running that down over that period basically to 0, also considering divestments? Or is it a longer process? And also to your point, you're outperforming in the rest of the business. Just to get a feeling for that, how would the ramp down curve would look like? That's the first question.

Yes, at least what is in the exit field today, and that refers to '24. That's why a big portion, 90% stands there. That's more or less done until '28. That should be -- that's exactly why we declined actually or supposedly decline on the top line, the main driver, turbocharger injector, partially as well the contract manufacturing, which still goes back to the county days. But what is in that box today should be then -- yes, that ship should have sail then, yes.

And the profitability level of that is also below par versus the rest of the business. Or...

It's a mix. It's a mix. It's on average rather below, but there are some good parts in still. And even there in the late days, we do repricing where we can, I guess, we make best out of it. So there are good part numbers in there, there are a bad part numbers in on average, a bit under profitability. By that, it helps the future here.

And then secondly, on E-Mobility, coming back a bit to the question that was raised before on longer-term profitability. It feels right now the innovation cycles in E-Mobility are quite short and intense. Obviously, it's different on the powertrain side. So should we think about more margin upside really materializing from R&D efficiency only if the business is, to some degree, more stabilizing and the innovation cycles are longer than they currently are? Is that another way to think about it? Or is it mostly really scale and other measures?

I tend to say it's more scale, but I would like to say when you look at the, let's say -- yes, let's say, E-Mobility, what is really, let's say, the innovation cycles we talked about. There is a lot of things going on in ADAS, connectivity, driver experience. When you look on the drivetrain, there is a strong -- the innovation cycles are more driven by cost. And that is something where you -- and I tried to explain this, you need to anticipate, you need to -- and that actually was helping us the global view such that we can build these platforms on what comes there and kind of future-proof.

And I know it's easy said, but that's really how we are driving it in order to, let's say, not spend, let's say, for this innovation cycles you talked about or these cycles too much R&D and rather build the technology, which we already developed. Meaning that, let's say, like a base technology like our power module, we can use them for 1 or 2 cycles to come. And with that, we want to manage the investments going into those cycles.

And last question will be on the ambition to be top 3 or top 2 across divisions. I'm assuming that this is really a divisional target and not for every product group within that. So is there a certain hurdle rate that you want to achieve also on the product level where you said, okay, after underperforming a couple of years, it's put under review?

Well, I can't assume that you achieve this on every level. But if you look at the size of the divisions and starting with bearings later on, Sascha is going to explain this. This is already competing with 2 others in that size. So we are nearly there or maybe even top 2, how you look at this. But this does not apply to every single product in that division.

I think Jens is going to explain it for his division and for the 2 others, this is -- when you put this together, with the product spectrum we offer, with the global reach we have with the customer base, Matthias mentioned it, this is clearly, as a division, a top 3 player. And this is not what we are saying what we want to be today. That's what we want to be long-term on a continuous basis.

Harry Martin from Bernstein. The first question I have is a follow-up to the top 3 target, particularly on the powertrain side. Can I push for some more detail there? Do you have an internal metric of your market share today? And by how much that would need to increase to get to that top 3 position?

And then a second related question, just thinking about the market size, but how the development between in-house spending and in-sourced spending by the OEMs on the powertrain side has been developing versus the proportion spent with the Tier 1 suppliers, and how you think about that in terms of share of total bill of materials?

Klaus, you would like to take the first part.

I could take the first one. We measure market share on product level business to user. Is there a metric how you translate this into a final KPI, how that should look like? Not for an ambition like this. But are we able to say where are we a market leader? 100%, Matthias gave examples. If you look at the new ones, take the chassis thing, we're not a market leader in chassis. We're also not top 3 there.

So look at this as a detailed product-by-product, business unit by business unit assessment. And then the sort of idea that these are the areas we want to push, where we want to gain and the others then follow, if we change the portfolio, overall, we think a top 3 is something that is possible. But it's not a formula where you can say, if I draw this, I draw this. It's always dependent on what others are doing. I mean we have a very competitive situation where a lot of things are changing.

Look at our main competitors here in Germany, what's happening there. We have a more sort of offensive view on certain things and market share there is an important element, particularly on a global basis. We talked about China. We want to demonstrate that this is not a German company. We want to demonstrate that we are able to leverage our global portfolio and also the global footprint.

One little addition if you -- and adding to what Klaus said, when you later on are in the exhibition and you see what Klaus showed to the German chancellor on Wednesday, this kind of powertrain, they would even claim we are positioned #1 because if you count then valve train and range extender, it depends what -- it's a moving target, that's what we're saying. So some we are already #1. Some is still to be defined with inverter and valve train and so on. But what we have on board is products makes us very optimistic to definitely make it.

I think the second one, Thomas.

Yes. And of course, that's something actually we are investigating, let's say, for many years. For simplicity, I would like to say we are seeing changing actually strategy with customers. Actually, there are customers, let's say, going, let's say, more in-sourcing, others are coming back. And we have to see how it evolves.

My working assumption is, let's say, it will go back to the suppliers based on also what I mentioned and where is the differentiation for our customers, and I see this actually even with a player who's -- let's say, known of high in-house because now with going global, it's also a burden on that side, to bring all this -- and that actually where that open up and that we have this project is not by accident in China because it's a preparation for what's coming. So out of this, overall, I would say the tendency will go more towards the supplier to generate the scale and to reuse investments and so on. But now when you would ask me when or when is the tipping point, we have to see.

And then the final one...

Thomas, just to add one thing. Over the cycle, this can be very different. If you have very new technology at a certain moment in the cycle, customers tend to keep things in-house. They want to control the new technology. They are not sort of taking too much risk. But if something more normalizes or standardizes, if they see there's a next big technology, maybe autonomous driving is one, they say, okay, let's focus on this and give that to the experienced suppliers. So it's something that moves over the cycle. That's at least the experience over the last decade, I would say.

Now that we are talking so much about it, I showed it, yes, we are not concerned about that. Actually, we want to support our customers for that. That's because then there is no customer I can think of who does everything itself himself or herself. So it's -- there's always a portion of that. And since we are opening ourselves up through that modularity and providing these components or even subcomponents, that is where we also can participate in those platforms.

I think we have one second and then...

Yes. It's Ross MacDonald from Citi. I'm going to be that guy and ask about the humanoid business. I appreciate it's not material to the financials today.

Can you maybe, Klaus, I guess there's 3 prongs to this question, but can you potentially size that market for us over the midterm? What does success for Schaeffler look like in humanoids from a top line perspective?

And then secondly, in terms of for analysts, how we should think about customers' next catalysts and headlines. Obviously, it's not a major driver of your 2028 targets, but what should we be looking out for on the humanoid side over the next 12 months?

And then finally, just the cost to the business, right, given we're still breakeven levels on free cash flow, and given the huge growth potential, how do you think about capital allocation with such growth potential, but obviously, a long-dated story.

Thank you, Ross. Thank you very much...

[indiscernible] bit out of it.

No, it's all fair questions, but you will appreciate that I don't have a crystal ball, and this is a different situation than the ones that we talked about.

The size of the market here is one of the hotly debated questions. Let me give you, my view. If you think about 2030, I think consensus at the moment is somewhere around 1 million humanoid robots globally. The lower end is 500,000, somewhere in that ballpark. And there are people that speculate that it's much more. I'm more with the consensus absence of a better number. The ecosystem is just emerging. We don't know yet.

And it doesn't matter whether we know or not. What matters is that we are prepared to sort of seize the opportunity here. And that has to do with your second question. Who are the customers here? If you observe what's happening there, it's very interesting that this is a deviation of the automotive industry to some extent. The automotive players are now thinking about, particularly the Chinese one, but also Tesla, what is in there for us. If you think about the customers, the customers are exactly those players, the bigger ones, name Tesla. You can go to the Chinese ones and look at who's building humanoids there, but you also have a range of start-ups, Agility, Apptronik, Vector, all you name them.

For us, it's important that we find the right partners with who we can work. And I can say at the moment, we have much more inquiries than we can handle. These are over 100 inquiries; we call them opportunities. 20 to 25 real projects that are ongoing with prototypes, both in China and the U.S., less so here. But also in Europe, there's a German, French activity that is coming up. And at the moment, and that leads also to your next question, we are waiting when is the first serious contract coming. And that's an open question who is going to come with this and what that is. Mass production here is probably something different than the numbers that we're used to in the automotive space, but it can become big.

Now in terms of cost and capital, what is interesting here, and that's what I said before, this is not something where we need to start from scratch to build new facilities or new technologies or come with completely different R&D. We are using what we have. And if you go to the product, and I don't want to go spend too much time, it goes again to what the colleague said. These are -- this starts with simple components, ball screws, things like -- maybe even a lash adjuster that we're using today for fingers. So these are things that we have already. We have, in particular, the technology to scale this. An actuator is, again, a little system, hopefully smart that you can decompose into various parts that we have. And that's the strength here.

This is not an area where we need -- you need to completely new invest, you would leverage what we have. That also requires a lot of cooperation from the -- across the whole group, and that makes it easier to justify the case with all the uncertainty. The cost of the business, we need to see. What is important for us here, the content per vehicle is dominated by the actuators. The actuators make typically somewhere 50% of the total value. Now if the book-to-bill today is x, it will decrease over time because there will be requests from customers to bring it down. And let me stop here. As it looks, this can be a very attractive case Schaeffler.

So I want to be respectful of your time of our time. Horst, the question still on? One last.

Again, on E-Mobility, we hear a lot about these changes in regulation in the U.S., it's just happening. Europe discusses that in Q4, See, Matthias is even advising on the change. So maybe running against E-Mobility in that case. Is it fair to assume that you would been -- or Schaeffler would benefit the most basically from, yes, slightly more relaxed targets more in the direction of PHEVs, but in -- because in PHEVs, I think you have got the main content, right? You have got ICE; you have got an e-powertrain as well. You benefit more from the shift towards PHEV, is that right?

And the second is more general political question. And I always hear in Germany, this noise about [Foreign Language] and they are struggling so much, and they try to dispose also E-Mobility business. I think sometimes the consolidation between Schaeffler and ZF would make perfect sense. I mean you cannot afford it probably. So maybe a question for Klaus. Would you agree that more consolidation is needed? Would that come ever on the agenda again for Schaeffler?

Maybe I'll start with the regulation, Klaus, because that's and horse really, not 1 minute since I'm the Kleber President, I think about my profitability when being there and discussing with the commission. What drives me in all honesty is how we can make reasonably E-Mobility happen in Europe. So that's the discussion we have, how we can even -- even do that similar like China with a new energy vehicle with taking plug-in hybrid into account, range extender into account to make it happen.

It's not that we wanted that huge one towards ICE or because Schaeffler would have a better life or whoever invests into us. That's not the driver. The driver is really how we can make it happen towards 2035. So -- and if we don't, my view, and that's as well a discussion on [ Asia ] with all the OEMs and the suppliers. If we don't open up the technologies, we will simply run into a certain portion BEV and the rest will be either buys from China or the last time buy in 2032 or 2033 from ICE. And then we have a worse climate equation than we would have if we change it now. That's all it. So not any minute, it's about profitability.

I think the second one is...

Well, let me first clarify. We are definitely not going to change direction on this year and now saying let's team up with someone else who has its own problem. We are not going to solve the problems that [indiscernible] have from our end. We have our strategy. We're going to deliver on this. This is the direction, very clear.

Is there more consolidation to happen? Maybe. We think that our setup now is unique. It's something that, as I explained, more resilient than for others. It's the motion technology company that has a lot of opportunities elsewhere and others need to decide how they position themselves. So I would say at the moment, clear no in terms of any other bigger transaction at the moment. We have our hands full here to deliver this. I'm happy to speak in some years where we are then. But the priority here is clearly on delivering that concept that we did show today.

Thank you. I think a very clear statement. So thanks for your questions. Thanks for you guys taking the time for the answers. And I guess we have already served now a short break to recharge a little bit. So please help yourself. Grab some coffee, some snacks. And don't forget, make use of strolling around through our tech exhibition, talk to our experts.

We would restart in 20 minutes from now. So for the colleagues online, 5 minutes past 3 CET. Thank you very much.

[Break]

Welcome back, ladies and gentlemen. I hope you could use the break to recharge your batteries and are ready for the second part of our Capital Markets Day.

So let me introduce our next two speakers, starting with Jens Schuler. Jens started his career at Deutsche Borse, but he is somebody that dedicated his entire career or most of his career to the aftermarket. After joining Schaeffler in 2002 -- 2003, he held various leadership roles in the automotive aftermarket across the globe. Over the years, he successfully led regional and global sales and marketing initiatives. In 2022, he became the CEO of the Schaeffler Aftermarket business. And in 2023, after we renamed our aftermarket organization into Vehicle Lifetime Solutions, Jens took over the helm there.

Following Jens, Sascha Zaps will elaborate on the current status of our Bearings and Industrial Solutions business. Sascha began his career at Siemens and later held various management positions in finance, strategy and transformation in global companies, including McKinsey & Company. Since joining Schaeffler in 2019 as CFO Industrial and Head of Business Development, he has led key initiatives and served as Regional CEO, Europe. In May 2024, Sascha took over the responsibility for our Bearings and Industrial Solutions division, and he is bringing really deep expertise in driving innovation and operational excellence.

So with this, I would like to hand over to Jens for his presentation. Jens, please.

Thank you very much, Heiko. And also a warm welcome from my side to everybody here in the room and online. I take you to a little bit of a different soccer field to our service business in Schaeffler. We sustain motion. And the 3 cars or vehicles on the slide that you see, that's what we like. We do business with older vehicles. We do business with vehicles that have high mileage. And you also can see a little bit there in the background, the electric vehicle is coming. And also here, we believe there is quite some repair business for us at Schaeffler, and I'll elaborate a little bit on that in a minute.

Now -- by sustaining motion, we want to make sure that we keep these vehicles on the road for a lifetime, but service business in our case is not just putting some hard parts into a box and shipping it on time. It is also highly digitized. And not just with all the new vehicles coming into play, it is also happening already today, and it has already happened in the past. Our way to market is already digital. It goes from the way to market now into the car and at some point, from the car into the product. And I think one future outlook really is that we ship parts before they are getting ordered.

Now with that business in 2024 and '24 is, I want to say, the third year in a row where we had some records in our KPIs from a top line. Also from an EBIT perspective, we do make money. Also here in that regard, we believe, or we see as far as that is possible, that we are living on a margin that is also higher than some of our peers, some of our competitors.

We have grown with a little bit tailwind coming over the last 3 years, significantly improving our holistic aftermarket model. We invested into supply chain capabilities. It is important that our parts arrive at the right time at a mechanic today, a mechanic doesn't have any inventory anymore. And if you bring your car to a garage, what is basically a pain point to all of us, you want to have that repaired as soon as possible, you need parts. And we have millions of parts, not only Schaeffler, but in that industry that have to be there same day.

Also on the Aftermarket Solutions, we have invested into our product portfolio, not only the part, but the appropriate data, software solutions to it, installation, maintenance installation information you need in that regard. The mechanic does some of the repairs once a month, maybe twice a month, you need to have good information to install those parts, and that's where we come into play as well. We don't have mufflers anymore. There's no wiper plates. These are easy products. We have complex products.

Continued market outperformance. When we look to peers, we're above peers. We're above the growth of our customers. And also, I will show you a slide above the growth in the market, all comes from our investment again into the portfolio, into our capabilities and also in supply chain. And then the resilient EBIT margin, I think we improved that as well, but we are set up to keep that margin level or further improve.

Now if you look into the distribution top chart, repair and maintenance is all the business that we are doing to independent garages. Specialty is basically everything that we are selling to the car manufacturer for repair solutions and then platform businesses where we have invested into e-commerce portals basically in growing markets in Asia Pacific. That business is picking up for us.

When you look into the regions, in some of our business, we are the #1, #2 in the product space of transmission or engine, for example. We're also significantly growing in Asia Pacific on a lower base. We need to improve our product portfolio. But again, the growth areas are in the Americas, China, Asia Pacific, also Europe growth, but on a lower scale.

Important is on the right side. It's good to be at Schaeffler. We have lots of products. The more products we have in our portfolio, the bigger our leverage towards our customers. The more our customers also like to work with us because they have a one-stop shop for certain categories. That's what we are doing. Also here a little bit, we take products, but for selling a product that we produce and that we bring into a new car, you need to have a complete solutions, and that's what we're doing.

We are looking at what really needs to happen in the workshop, how a mechanic can repair. And so we are also adding some components to the repair that is potentially not produced by Schaeffler, but that's the repair solutions. And again, we're picking from all the product families from Schaeffler in order to bring that to market.

Now if we look a little bit into the fundamentals of our business and outperformance is always a little bit more difficult maybe in that regard, but we are looking in the first instance to car parc growth and the car parc is growing worldwide. You can see that here, 2% on average. That's good for us. More vehicles are coming into the car parc. What we also like to see is that there's a certain aging of the car parc. Also here, we have an increase in age from 11.3 years up to 12 years, 2028. I also have to say, at some point, we also would like to have new cars. because if everything is old, then the repair also gets under pressure. So we need new cars, and we also hope that there will be more electric cars.

Coming to the very right side, still ICE and HEVs are dominating the car parc, 1.7 billion, almost 1.8 billion cars around the world. We see an influx of that E-Mobility. We are preparing for that, but we can say that transformation technology-wise is definitely slower than on the OE side in those fundamentals coming to the powertrain shares and the car parc.

Now with all of that, where is truly our expertise from an aftermarket standpoint at Schaeffler? It is definitely we have that technological expertise from our OE colleagues from the OE business that we are running. The strong domains of our repair business is there where we have OE sales. But as I already said, it's not only taking that OE part, it's enabling complex repairs to the mechanic, and that's where we add an expertise to the Schaeffler business.

Aftersales sector expert, I also can say this year is the 50th year we are in that business. I want to call out that at least for the clutch, we have invented some of the repair solutions that we call a kit. Prior to that, the mechanic had to choose single parts. And as the car parc get more complex, there needed to be more information and more repair kits to do a proper repair as a mechanic. That's the middle column.

So we believe we are an expert. We understand different levels. We understand all the value chains in that business, and we are maximizing our exposure here for Schaeffler to grow our business.

Dedicated setup, also something where Schaeffler has already, over the years, over decades has invested into is that we really have a dedicated aftermarket business with all the relevant functions that we need to run our business. And again, coming back to that product portfolio, it's also the outlet for Schaeffler for all the automotive products. And there, we maximize, obviously, cross-selling in our customer base.

To the right side, I want to come to that also on the next chart, but already here, we're also building on our strong brands. If you buy a Schaeffler brand, there is a commitment to that, that there is the right part, that it's reliable, high quality and that you have an easy installation, so to say, and you get also help once you need that.

On the top, it's one portfolio. Years back, we were not sure how that E-Mobility business will evolve. But honestly speaking, a, we see some business; and b, we also like the complexity in the car parc besides more cars, maybe older cars, maybe e-vehicles, the complexity is just increasing, but whoever owns a car still wants to repair that as of today and also going forward.

Simplify the repairs, it's already also digital. We are at the fingertips of a mechanic. Everybody, once you have identified the repair, once you have ordered our product, you get everything that you need for a repair. That's why the mechanic is really trusting in a Schaeffler -- in a Schaeffler solution.

Our product portfolio over the last years has been a big restructuring for us, how do we go to market once it's not just an old product portfolio for an old car parc, it's the product portfolio for the relevant car parc. And we honestly don't really care what it is as long as we have a repair solution for it. We are in the areas of powertrain, of thermal management and chassis parts. That's also how our customers look at the product portfolios. Inside there, we have transmission engine. Clearly, here, we are the #2, #1 depending on what market you look.

E-Mobility is to be set up, same as thermal Management. Thermal Management can be a part of E-Mobility. We believe that this will be a big area for repair and maintenance. That's why we carved it a little bit out of the E-Mob side. And then chassis, also very agnostic to the powertrain is our bearings business and steering and suspension.

Now if you see that yellow column there, that's where we close the gap in our portfolio with Vitesco products. We have more electronics, more softwares, more sensors. And that also gives us a good exposure, and we are currently ramping up all those portfolios for the independent aftermarket. So there's a good benefit from the Vitesco acquisition for our aftermarket business as well.

Now if you see the lower green portion there, 50,000 articles that are actually sellable from our Schaeffler portfolio. Globally, 2,800 for electrified vehicles. That's an area where I work closely also with Thomas on the E-Mobility side, that number definitely will go up that complexity in the car parc increases. We're not only working together where are we at Schaeffler supplying parts, how they can be repaired. We're also looking into what is potentially a more sustainable design for that repair or afterwards then also to recycle products that we bring to market. And we also have a high interest in the future aftermarket to get our products back once they leave the cycle.

2,800 parts, at some point, the world was not sure how will that business of repair develop in E-Mobility. Clearly, if you are in the e-axle, if you are in the thermal management, heating, cooling, battery management, power electronics are areas where we see in markets with a relatively high population of EVs, Norway, Sweden, that there is good business, but potentially a little bit lower in the count, in the amount, but significantly higher in the incident in price to the repair. The repair gets significantly more complex. Just look at window shields that get replaced. They all have a camera; they all have a sensor. They all need to be calibrated, and that's increasing the value of the repair.

Now to the right side, what do we do differently and what do we have to do in order to market those solutions. You can see that here, we have a repair kit for an e-axle. We have been the first to bring that e-axle repair kit to market. And that's also a competence here. How does the customer know what to buy. We look at relevant cars in the car parc for what -- for which repair needs to be conducted. So we're starting here with a repair solution for a large -- or started for a large German car manufacturer, but also everything else, what we see as relevant for EV, we have a solution there as well.

Then the services, again, those repairs are conducted as of now, not too often, you need to have the right tools for it. We also can explain that out there at the exhibit, the technical information, the online support. And we specifically want to make everybody able to repair the part, not just to exchange a part to a new part.

And then on the market access side, also here, we have business on the OES side, works very similar to the independent aftermarket. There's a different solution, maybe a different brand in the play as a car manufacturer wants to have his logo on the box, independent aftermarket, our core business. But we also see with digitalization, that business is getting closer to the workshop. So we're also preparing already for the time where we potentially sell more and more, whether that's through customers or through us to a workshop as we do in our e-commerce business models in Asia Pacific.

Now key drivers for our financial outperformance. I can just repeat that future-ready product portfolio. It goes in the right direction. We are getting ready for all makes and models going forward, all propulsion and engine types, multichannel approach, you see us already everywhere, and that is very well coordinated through a centralized approach so that we can steer that business.

Customer centricity means not only to the distribution, but to the mechanic, that's core for us. We call ourselves meanwhile, a distribution powerhouse. We deliver really parts on time in the right quantity that we do globally. And once again, a workshop gets 3, 4 times a day of delivery, the part needs to be there and whoever delivers fastest makes the sale, and that's what we have shown with our new setup, whether that's here in Europe or around the world.

And then Smart capital management, yes, we already have production plants that produce for aftermarket, close collaboration also there with PTC, where we are already in some very efficient small series production in order to make availability possible for the next years to come. And most of our products in our product portfolio, product categories yet have not peaked in a sense that they decline. Most of them are still on the rise. And with that, you can see there on the right side, performance, again, over the last couple of years, significantly outpacing in the combination of what we have done here as a result in growth.

Now I could repeat the top ones, but the important ones are on the bottom. We obviously have still some way to go. Also, we -- in the footprint discussions with our PTC business, we are looking where do we have small series, where do we have to take over the one or the other plant in order to make sure that we can supply products over the next 15 to 20 years into the market. That works. We have inherited 4 plants across Germany, South Africa and Thailand. And as we continue in the discussions, it's a continuous process.

And also very, very interesting as the repair market goes more and more into an ecosystem, there are electric vehicles, there is the battery. There is delivery topics coming up where we also look into how can we further grow into that ever-evolving ecosystem that also then has some new emerging businesses for us, where we believe we should be in, but that's still to come.

In the sales outlook over here, higher single-digit growth until 2028 up to EUR 3.75 billion, EUR 4.25 billion in sales. The margin, we do see some competition, as you can imagine, that the aftermarket is attractive for many companies. We do some competition, but we have to set up to compete and strive for a margin between 13.5% and 15.5% until 2028.

With that, again, we build our story on what we can, on what we have. We're adding new topics. We're not afraid of any EV business. There will be repair. And again, in the collaboration and in the outlook that you have heard around E-Mobility, there will be business from Schaeffler. We strive also for continued market outperformance with our customer access with the capabilities that we have. And I think the margin is pretty clear that we believe that's resilient for us to continue and add here to the all over Schaeffler success with our business.

And with that, I stop here. hope for some questions, and I hand over to you, Sascha, for Bearing and Industrial. Thank you very much. Thank you.

A warm welcome also from my side. Sascha Zaps is my name. I have the pleasure to present the Bearings and Industrial Solutions organization and our current status.

When looking at our division, and you have followed that closely. Last year, we closed with EUR 6.5 billion in revenues and 6.7% in EBIT margin. That includes already some portfolio decisions we have taken. I think one number stands out here, and that's -- I want to highlight as well as we're not reporting that to the outside very transparent. But especially in our business, once comparing to our competitors, it's super important to also look at EBITDA. We have generated also last year already an EBITDA of 13.1%, which shows the significant cash flow generation power of that organization.

We are globally leading from a portfolio point of view, Klaus mentioned it earlier, we are #1 or #2 in most of the sectors, except for one. We're in a position 2 or 3. There's quite a distance to the #3, which is Timken and also a distance to the #1, which is SKF, if you look at our bearing competitors, leaving the linear players at the moment aside. We are operating more than 40 factories. So we are truly global with our operations supported by more than 30,000 people in all those countries and also factories.

Last year, and you have seen that we were faced in the industry, not just we, but also our competitors with a market decline, which we also have seen in 2023. We are flattening that out a bit at the moment. It's not yet that there is significant growth, but it's flattening out on the bearing side. And that clearly called for action in terms of profitability improvement.

We have not been able in '23 and '24 to basically improve our cost structure to the extent that we wanted to, which finally led also to some of the margin deterioration for us. And for me, when I started in May, that clearly called for a transformation plan, a holistic transformation plan. We basically looked at the entire product portfolio. Every customer relationship needs to earn money. Every factory needs to earn its cost of capital. Every product needs to make money.

And we looked at that from various angles to decide what will be part of our core portfolio in the future, what do we optimize, what do we fix? Where do we double down on things which run very well and what could that lead us to? And that finally, I'm going to show that in a few more minutes, led to the program we have outlined. But it's not only about cost, it's about growth, it's about innovation.

And we have a couple of interesting examples of innovative products also with us in the presentation. At the end, we want to be one of the cash generation engines of the Schaeffler Group. And again, the EBITDA, which we have already in '24 shows what is already there and what is possible with further operational improvements, but also revenue growth.

If we look at the -- sorry, if you look at the portfolio, and that's a similar page you've seen from the other colleagues. We have organized and Klaus has mentioned that with the integration of the Automotive Bearings division last year in April, our business into four business divisions, one with a clear focus on the Industrial Bearings part; number two, on the Automotive Bearings part, on the Aerospace Bearings part, which is operating in different factories and has different basics and the Linear Motion part, which also includes our Ewellix acquisition we have done in 2022.

If we look at the sales by region, 42% is in Europe, while 58% is outside, a large part in China, a significant part in Americas and 16% of the revenues is currently being operated and dealt with and generated in Asia Pacific. Certainly room for growth, and that's also a key focus area to grow outside of Europe more than we would probably expect to grow in Europe in the years to come.

If we look at the sectors, and we have now clustered it here in addressable market clusters, split in Automotive and Transportation, in Industrials and Energy, and they're all relevant in size. If you add them all up, it's a significant number of more than EUR 50 billion, where we are a player with EUR 6.5 billion. So we have around about 12%, 13% market share and actually operating and serving all relevant customers in a market which need guided or linear motion, either rotative or as I said, linear.

We are -- if you just pick a few of them, and Klaus mentioned that the clear #1 on the Automotive side, we are the clear #1 on the Renewable Energy side to the right, on the Wind Industry, on the Transportation side, Commercial Vehicles, # 2 to #3 on the Rail side and also Aerospace, a very interesting growth market, not just on the civil part, but also on the defense part and the largest market plus clearly industrials, we are well positioned as a clear and strong #2 next to in most of the cases, SKF.

I've picked three examples of defined highlights and high-quality solutions. Number one, Passenger Cars. And that's where -- and we heard that also earlier today, where our entire understanding of our automotive drivetrain, but also chassis business pays back. We are not just a bearing supplier who's supplying a bearing to an automotive supplier. We understand the entire system. And specifically, once you move to battery electric cars, understanding the system, understanding the friction requirements of bearings, what they can impact in terms of durability of the battery, reach of the car and also cost and total cost of ownership for a car, it's super important, and that's what customers value a lot, especially on the Automotive Bearing side.

On the Aerospace & Defense part. And Defense -- for Aerospace and in that part, we are clearly one of the key players when it comes to engine and gearbox bearings with production footprints in Europe, but also in America, not just on the civil part, also on the defense part, and I guess every one of you is traveling a lot. So the likelihood next of your plane travels that you travel with an Airbus and Boeing or something else, which has Schaeffler bearings, typically aid in an engine is very high.

And there are some of these customers, they are known and we have published that some time ago, which even buy 100% of their bearings from us, which clearly shows also that we are not just a reliable partner when it comes to technology, but also to deliver reliability and, of course, superb quality in a very, very critical component.

If we look at renewable energy, another super important field for us, which helped us a lot to grow over the years, knowing that competition in China has increased a lot. We are clearly still the #1. Most of our competitors have lost significant market shares in China. Others have announced that they consolidate sites. We are the only global supplier who is delivering to everyone in that industry, typically gearbox manufacturers and the OEMs on the turbine side with main shaft bearings, generator bearings or gearbox bearing.

We are opening in October, an important milestone, the largest main bearing test rig in Denmark. It will be able to simulate and test entire drivetrains up to 25 megawatt of turbine size, the current turbine size in the market around the 16 from the European ones and American ones, and there is the first one or the other Asian who is running with 18-megawatt turbines offshore.

If you look at our Transformation program, as we called it, I cut that in three pieces. One is leveraging our customer value proposition. That's clearly about innovation. It's about growth. Second, operational excellence. If you don't optimize your cost, you will lose competitiveness, you won't win business, you don't generate cash, you won't be able to invest. So it's a cycle. I think we all know also capital management, of course, a very important topic in that as well. And rightsizing our core business. I think Klaus has also shown the locations we have announced for footprint consolidation, the largest part of the rightsizing of our core business that we are doing in the Bearings & Industrial Solutions organization.

We plan to grow 2% to 3%. That sounds low, but we don't expect large growth on the automotive side. So we expect a larger growth on the Linear Motion, Aerospace, but also Industrial Bearings side with a target to reach 9% to 11% EBIT and you can do the math for EBITDA and at the same time, be a strong EBIT and cash contribution and also have a strong EBIT to cash conversion for the Schaeffler Group.

If you look at number one, the growth part, levering customer value proposition, and I touched one or two of the examples already. That's a TriFinity wheel bearing, which we have designed, which is unique. And I mentioned the topic friction 10 years ago, probably nobody really thought at the first place, what is the friction in the wheel bearing.

Is that really relevant? Once you move to battery electric cars, it's super critical as it has a huge impact on the range of the car. And as we all know, battery is one of the most important, if not the most important and expensive component in a battery electric car and working on CO2 efficiency with that, being able to reduce either the size of the bearing or the extent of the range extension is super, super important.

On Aerospace, on the main shaft bearing for the engine, an interesting innovation we have done. We have basically integrated the cooling channel. You probably won't see that on the picture, but it has a huge impact on efficiency for the turbine with that, especially in the Aerospace industry, a super important topic, reduces CO2 efficiency, higher reliability and robustness.

On the Electromechanical actuators side, and that's a part we have acquired with our Ewellix acquisition on the Linear Motion side. Today, we have many topics which are still operating with hydraulics. So hydraulics will be in most of the operations, especially in off-road, replaced by electromechanical actuators. We are well positioned there and want to drive that development going forward. The interesting growth rates, which we see already today, even in markets which in that business are currently or have been more declining over the last 2 years.

Overall, we want to invest more than 10% of our R&D in innovation, and we'll continue to drive profitable growth with that in the future.

If you look at operational excellence, the second part, and there are a few examples, and I won't go through all of them, but it shows you what we are doing and how deep we go into the organization and how consequent we are with the things we do. Optimization of our supply network is number one. We have been operating with too many suppliers in too many locations, and we are massively consolidating them over the next months and years. That's not something we can do overnight as, of course, we have thousands of parts and many suppliers, but the potential is huge.

Just one example we have done, and we have staggered that in different categories where we run now different processes to basically reduce the cost for us when it comes to rings, when it comes to cages, when it comes to rolling elements, when it comes to packaging and other things with significant potential. We also implement the global sourcing hubs in India and in China for global sourcing, not for sourcing for China or India, and other potential to be closer to the market and also leverage the potential from China and India for our productions outside of those regions.

Realizing synergies and there we have actually both two elements. One is -- we've integrated Automotive Bearings. So there are, of course, synergies on the R&D side. On the production side, we have been operating in the same production in two different organizations. So we leverage the synergies in R&D, on operational efficiency, also on the supply chain, that doesn't work for everything as the product range and the size of the bearings has limitations in automotive compared to the industrial part where we go up to more than 4 meter outer diameter for bearings on the wind turbines.

And the second one with the integration of Vitesco, an additional element, especially on the indirect material to, of course, use the leverage of a larger organization when it comes to all kind of indirect materials as logistic costs, IT costs, et cetera, which, of course, helps us also in the division.

Another one is capital management, and that for us has several angles. One is inventory management. And I had to last year, probably implement rather rigorous measures in terms of how do we steer factories. We have been piling up inventories over the first half, and we have reduced more than EUR 200 million of inventory in the last 6 months of the year, basically changed the entire management of how we steer factories and how we basically do the demand management.

And I can say that for this year, we have, in the first 6 months this year, generated more than twice of the cash flow compared to the last year's first 6 months. And that's related to inventory management and to strict capital discipline. We have cut due to overcapacities due to a large footprint we had and to some extent, overinvestments due to also a shrinking market where capacities were not used significantly cut CapEx by more than 30%. We'll continue that also for '26 to basically grow out of this overcapacity with also -- and expected to grow market. At the end, delivering sustainable profitability and, of course, cash for the company.

If you look at rightsizing of the core business, also there are three elements. Active portfolio management, Klaus mentioned one, we have decided to take out the electrolyzer business, which was part of the Industrial Business and had, of course, relevant ramp-up costs as defining them as non-core for the division. At the same time, we acquired a company, which we renamed afterwards in Schaeffler Ultra Precision Drives around gearbox activities, which we were not able to successfully really integrate and move to a direction we wanted to move to.

So at the end, we said we're going to sell it. The process is currently ongoing. And we hope to close that latest by the end of the year.

At the end of the day, focusing on the core from a portfolio point of view, which is focusing around bearings, around Linear Motion and innovation around our bearing and motion -- Linear Motion applications when it comes to condition monitoring, smart lubrication will be the key. I will limit ourselves to and basically grow from there into a higher profitability structure than we have seen it in the past.

Footprint consolidation, I mentioned a part of it. We have actually touched 10 locations. I announced that on the 5th of November last year that we will massively rightsize and/or close locations. 10 production sites were affected. Steinhagen, we announced 3 weeks ago as this was a site where we said we're going to try to fix it. We came to the conclusion that we cannot fix it. And we announced now to close it and transfer the activity to Schweinfurt.

Berndorf, is a site in Austria, which we are going to close by the end of this year, latest quarter or next year. So everything is in operation. Taoyuan is in Taiwan. That's an activity on the linear side, which we're going to close by the end of the year. And Homburg is, that we have three plants. The plant around the Linear Motion activities is also in preparation for a transfer to Eastern Europe and then closure as soon as we are done with that as well.

In other large locations like Schweinfurt, Kysucké, just to name a few of them, we have significant right-sizings to basically further move to best cost countries and adjust our cost structures in that -- in these locations as well.

Third element, streamlining the organization, and that focuses more on the overhead side and on the indirect production side, overall, we are targeting up to 20% headcount reduction in all indirect functions, while growing. We have reduced work time for all white collars in Germany by 10%, including a salary cut by 10%. We have short-time work. We basically reduced people with early retirement programs.

So we're using basically the entire portfolio element, so to say, to optimize cost structure, especially on the labor cost side, relocating activities to best cost countries when it comes to R&D, when it comes to shared service activities and non-core functions in admin areas and of course, streamlining the organizational model.

And one example there have cut down 20% of the hierarchy levels in the entire organization. So either the managers are leaving the company or they'll go back into a line function, which, of course, is not always pleasant, but needed and required to basically significantly drive also operational efficiency from an overhead point of view.

This will -- and that's my target, my commitment here clearly lead to growth, growth towards EUR 6.75 billion and EUR 7.25 billion in revenues with a significant EBIT uptick. You have seen the first half year results. I expect to continue moving in that direction, and the target is moving to 9% to 11% EBIT by 2028.

As I mentioned, our transformation program is fully on track, and we are absolutely committed to deliver that to drive operational cash flow improvement and significant EBIT contribution for the Schaeffler Group.

With this, I'm at the end of my part. Thank you for listening and hand over to Heiko.

Thank you, Sascha. Thank you, Jens. So last but not least, it is my pleasure to introduce our new CFO, Christophe Hannequin.

Christophe began his career in finance functions in North America and Europe. He was driving change in finance organizations at international companies like Plastic Omnium and Michelin. And prior to joining our company, he was the Group CFO of JCB.

Now beginning of the year, Christophe joined the Schaeffler family. And 2 weeks ago, he officially took over the responsibility for finance and IT. So you will realize on paper, it's 2 weeks on the job, but Christophe already has a very deep understanding of our company.

So with this, Christophe, welcome on stage.

Thank you, Heiko. As you mentioned, this is day 15 or day 16 for me on the job in this role. But I had the opportunity to join the company somewhat early, spent quite a few months visiting our regions, our plants, our teams, our tech centers. So before we dig into the financial numbers, before I try to pull together everything that has been presented so far, I thought I would share with you a couple of key takeaways from my time at Schaeffler.

And the question that I'm trying to answer behind this, when I chose this opportunity, did I make the right choice. After you listened to four presentations, the road maps, the strategy, the energy behind, I hope you will agree with me that we are uniquely positioned to deliver value and growth over the next few years in the environment that we play in.

Our products, our people, our regions all put us in a very, very unique point in this year. Our markets are changing. Our customers are changing, so is Schaeffler. If you look today at the setup that we have, the setup that we've chosen that we've been implementing, we are uniquely organized in order to tackle this.

There's one topic that has not been discussed in a lot of detail today is the strength of our regions. Our go-to-market is rooted in the regions as well as in the divisions. We are adapting to this new setup, and we'll be able to take advantage of the first point.

The third point that I want to share with you or communicate with you, performance focus is essential, and we will need a step change or a renewed commitment to performance management in order to deliver on the opportunities and on the targets highlighted in the first two.

To the question, did I make the right choice? I'm absolutely convinced. The answer is yes. Up to me to then flip the question and prove to the group that they made the right choice by having me as Group CFO and delivering on the targets that you see here, doubling of EBIT by 2028, financial discipline, I keep going back to this, but operational excellence, restructuring, delivering on our synergies is a key component of being able to achieve the numbers, both top line and bottom line that we described. And doing so, while delivering a strong free cash flow, which is the key to an attractive dividend policy for our shareholders.

Again, a lot has already been shared, but if I try to bring everything back together on a few key KPIs, sales, EBIT and free cash flow. On sales, overall, we aim to grow above market share -- above market growth, the average market growth rate. We'll do so in transforming market. Summarizing everything in one number when you understand our business, it's complex. So we will dig into it a little bit, but we can already see that it is supported by a strong order book, and it's not just wishful thinking.

EBIT will double from 3.5 points to a range of 6 to 8 points, supported by the three key elements that you see here. E-mobility breakeven is the number one, delivering our structural improvements and focusing on performance management will be the second, unlocking the synergies and the addition of Vitesco into our ecosystem is the third one.

Free cash flow will increase materially over time. We will dig a little bit into what is behind it and how to truly understand this improvement.

If I first take a look at sales, if I first look at this 4% average growth rate for the group, we see that we have different dynamics. E-mobility, plus 15% compounded over time from EUR 4.8 million to between EUR 8 million to EUR 9 million is the strongest contributor to growth. Thomas highlighted the story behind it. It is completely in line with the market that we operate in, and it is about delivering.

Powertrain & Chassis is more a story for us of resilience, as Matthias explained, and leveraging some selected growth opportunities that we have identified.

VLS is about growth above market, not as strong as the previous years, but still significantly above the market growth rate. And there I say in a complex and increasingly competitive environment, we'll do that by leveraging all sales channels and leveraging an expanded portfolio of offers and services.

Bearings & Solutions, Sascha just explained it, will focus on performance improvement, optimizing its portfolio, its operation and seek moderate growth in some selected sectors.

If I now take you to the EBIT level, remind you on the left of the graph at the makeup of our profitability, you understand quite easily that E-Mobility is the first challenge to deliver. It is the must deliver in order to succeed in this improvement. But you also understand at the same time that we will target improvements in most of our other divisions or the resilience of the existing margin.

Yes, yes, we can target some additional EBIT contribution. But in some cases, it is more important for us to ensure that we deliver the existing high level of contribution that are part of our profitability today.

If I think about the levers that are behind these improvements, if I try to summarize them by division, you see that we have different dynamics. E-Mobility, as covered by Thomas, is actually a balanced mix of levers enabled by growth. Growth in the case of E-Mobility brings additional margin, obviously, but it's also the way to unlock what we can do on the cost side, be it in manufacturing, in R&D or overhead.

Powertrain, I would call it a laser-like focus on making sure that every bit of margin lost due to volume is compensated by some strong work on our cost structure, on our efficiencies and our ability to again compensate the decline on the volume.

VLS, summarized this as growth. Again, it's an above-market growth, trying to compensate both competitive -- both competitive pressure on the pricing side as well as the increasing impact of some channels where margins are differentiated. If you think about platforms versus direct distribution, that's what I'm referring to.

On the Bearings & Industrial side, restructuring, operations focus and a slight growth is the key to the game. At group level, when you sum everything up or when you aggregate everything, you actually have a balanced set of levers from business growth to operational performance to R&D efficiency to SG&A and overhead improvement.

If you add our hedge logic on top of it, you will understand that even though the future may not unfold exactly as we forecasted as we write it, we will be able to leverage one or the other in order to still deliver the 6% to 8% that we're targeting.

Strong P&L, strong EBIT improvement for us will also translate into some cash flow improvement. You all know our reported cash flow numbers. They are listed here at the top. If I take you to underlying cash flow, so if I take out the one-off payments linked with the integration -- sorry, linked with the acquisition of Vitesco and Continental, if I take out integration and restructuring cash flow, we end up with a beginning point of EUR 43 million. This EUR 43 million translates to EUR 600 million to EUR 800 million in 2028 or in our targets for the reported cash flow, EUR 400 million to EUR 600 million. This is driven by improvement from our EBITDA, obviously, a moderate increase in our working capital over time.

So we grow, but the related impact of our working capital will be less. A focused spend, which has been a recurring theme throughout the day on CapEx, EUR 1.1 billion on average at group level, which I refer you back to the numbers for 2024 or even if you go back pre-merger to the Schaeffler numbers, this is lower. So it's less spend, and I'm not going to say better spend, but more focused spend, very, very disciplined capital allocation in order to ensure value creation in our business.

Integration and restructuring cash-out is still there. But even with this, we end up with a free cash flow conversion of 30% to 40%. It is not quite yet benchmark, but for sure is a step-up to where we are today and goes back to what Schaeffler was known for in the previous years. So there's some upside on top of this. We will see how we deliver in the years after.

Strong underlying free cash flow, strong free cash flow allows us to do two other things: a, confirm our dividend policy, 40% to 60%, which in this period of transformation is important for us. And deleverage targeting a 1.5x to 2x. There's still some willingness or some desire to improve outside of the 2028 time frame. But 1.5x to 2x is what we're comfortable committing to, still a big step down or big step up depending on how you read these things. From where we stand, the number that you have here, by the way, it's not 2024. It's the first half of 2025.

And combined with this investment-grade rating at some point is it's in the process. It's not just linked to these two KPIs, obviously, to the leverage ratio, but it is on the road map as well.

If we're talking about cash flow, let's spend a couple of minutes talking about our maturity profile. If you look at it, you can see that it's quite evenly distributed. 2025 topic has already been taken care of. So no real issue there. And from '26 to 2030, we have maturities, but they're evenly distributed. We can also count on a pretty strong track record when it comes down to placing our debt. We demonstrated that again in the spring this year. Combined with good liquidity, we have what we need in order to execute our strategy and the numbers that you've seen before.

I bring you back to the mid-term targets. Klaus already highlighted the group numbers. You've seen bits and pieces from the different divisions, but it's worth going through them again. At group level, we will target EUR 27 billion to EUR 29 billion, delivering 6% to 8% worth of EBIT and a cash flow as reported EUR 400 million to EUR 600 million.

If you look at what part contributes to what, E-Mobility will have to reach breakeven as targeted by Thomas on a business that should be in between EUR 8 billion to EUR 9 billion. PTC will demonstrate the resilience that it needs to in order to protect its margin on a slightly decreased turnover.

VLS will grow slightly or moderately above market growth while protecting its margins. And Bearings & Industrial will deliver on the restructuring, on the performance improvement as described by Sascha.

Combined with this reinvestment rate of 1, a leverage ratio between 1.5x to 2x and a dividend payout ratio of between 40% to 60%. We feel quite comfortable that the strategy we have, the road maps that we have described to you today will allow us to target -- to deliver on these targets.

In my role as CFO, I will be both an enabler and an enforcer making sure that we stay on track and that we deliver on these targets. In that sense, very much look forward to giving you updates on a regular basis over the next few quarters on how we progress and again, bring you back to the key commitments on which I will personally take care of doubling EBIT by 2028, making sure that financial discipline is front and center in the way we operate and ensuring a significant free cash flow and consistent with an attractive dividend policy.

At this point, I'd like to welcome Klaus back on stage for a few closing remarks before we go to Q&A.

This will be very short and very brief. If someone clicks for me, I just want to sum it up and say this is a team effort. You saw all the members that have clear targets. We will deliver this only as a strong team. We are very experienced over the years. Most of us work since years together. We have industry knowledge that is, I would say, unrivaled. And on that basis, you can be rest assured we are fully committed to deliver on what we promise today. We keep it short. And I think the next part is then again, Q&A. All are already here. Thank you very much for listening, and thank you very much for following.

Thank you very much. So ladies and gentlemen, we wait -- I need my speakers. So I hope you found the information that we gave so far interesting and helpful. May I ask the remaining speakers of today back on stage. And then yes, you can directly shoot your questions.

Okay, Michael, we missed you the last time. So please. You skipped yourself.

Mike Raab, Kepler Cheuvreux. When I look at the composition of the 2028 EBIT, doing a rough calculation, taking the bandwidth of sales for every division and then the margins, what is the contribution from others and eliminations roughly in comparison to what it was in 2024? It is more or less flat, up or down? And if so, for what reasons, please?

Christophe, you would like to do?

So others is still slightly negative by 2028. It's an improvement compared to where we are today, if you look at our numbers. It's a mixture of start-ups. We discussed humanoids. We talked about defense. We talked about hydrogen. It's also businesses that we phase out. So giving one specific point to explain the bridge is difficult, but the weight on the profitability of the group decreases slightly between now and 2028. By the way, when you look at the overall scheme of things in the group, the others division doesn't really impact the numbers too much.

So when you say slight, that's like what less than EUR 100 million? Less than EUR 100 million.

Yes, absolutely, less than EUR 100 million.

That was my only question.

Vanessa?

Vanessa Jeffriess from Jefferies. Just on Bearings first. Just if we look at that margin target versus one on the last Capital Markets Day, how much of the difference is attributable to Automotive Bearings being included? And how much is attributable to challenging end markets? Like how much is structural? That they were 12% to 14% and now 9% to 11%.

Automotive Bearings part remains to be at the level it is today. The uplift comes from Linear Motion and the Industrial Bearings part as well as Aerospace. We don't expect a further growing as we are anyway already the most profitable Automotive Bearings company. We don't expect a further growth as there's no revenue growth targeted with price pressure. So we'll need our operational excellence to cope with the price pressure we have in the market.

And if I can just ask a question that's a bit more hopefully, short term in nature. Obviously, the focus was on auto tariffs. And I guess now bearings have been added to Section 232 last month. What's the strategy to manage those? Just with the bearings added to the tariffs last month.

Bearings added to the?

Added to the Section 232 tariffs last month.

What the impact was on the tariffs?

Yes. I mean, what will be the strategy to manage those, because I imagine it's different.

Of course. I mean, on the Bearings side, we target to fully push that into the market. There is a limited impact for this year. We expect some due to time lag, right, of swallowing the cost on our side and giving that back to customers some movement into next year, but it's low double-digit million.

And then just a quick one on VLS perspective. If you could talk about the different offerings you have in each region and maybe the networks you have and what needs to change?

I mean, when we look into different regions, if the question goes in the direction, if I understand correctly, how are we distributing in various regions. Then I would say, if you look at the Americas, very traditional distribution. You can go to the U.S., big influx of e-commerce. If you go to Europe, traditional distribution. And then if you look into Asia Pacific and China, there, we see clearly that the market develops more to an e-commerce environment.

I think, Christoph was next.

The first one will be on the phasing of the earnings improvement. You've indicated the cash improvement by year. Should we roughly assume that the earnings improvement is following the same step-ups or smaller step-ups in '26, '27 and then a larger bump in '28? Or is there anything else driving the cash improvement to that degree in '28?

As I explained, you have many drivers behind the cash improvement. Some of them are related to specific events happening, us delivering on the restructuring or us starting a new program on the sales side, for example. So I would not take the linear profile that you saw on cash as something to use completely for the year-by-year modeling that you do on the B&I side. It's a little bit more -- it's not as linear as it covers, it looks.

And what would be a good indication then to think about the phasing of the earnings?

We discussed when we talk about guidance for 2026, you've seen directionally, we're talking about a 3-year time window. So the volatility can also be that big. But again, if you think back about what drives the earnings improvement, what drives the cash improvement, they are all related to different drivers. Not all of them will happen at the same. We still have a 2026 and 2027 where we're focusing a lot on integration and restructuring.

And then staying a bit with cash, there's still EUR 200 million roughly for restructuring or cost measures in the '28 plan. How is that split across the divisions? Is there anything particular that you can share on that or...

That's not a number that we share. It's integrated -- there are two concepts behind this, integration and restructuring. You've seen the programs that are announced. You know which plants are impacted, which division is more impacted than the other, but we do not communicate on this by division-by-division.

And one question for B&I as well. It looks like 2/3 of your earnings improvement is really stuff that you can do in-house, managing costs improve on your end. You already highlighted to the H1 margin as the first step to take. How quick can you get most of the stuff done? Is it really a couple of years? Or are there a couple of things that you can already resolve in the shorter term?

It goes back to what Christophe said. It's a phasing, of course. And we are a large organization operating in more than 40 plants. The restructuring takes some time to get it executed. I mean, there's lots on the procurement side. There's lots on the operational efficiency. There's pricing. So it's a variety of things. I would say you can count it step by step every year to get there. It will not happen overnight, but we expect contribution every year to gradually see that growing until 2028.

So I think it was Harry Martin, right?

Harry Martin from Bernstein. The first question on VLS, just the guidance on revenue growth for an 8% CAGR versus that low single-digit vehicle park growth. If you could help us get comfortable with that number, how would you split the outperformance, the 8% growth between volume, price mix? And if you can compare that to how much of the recent very strong growth in that segment has been coming from pricing?

I mean, as already elaborated from Christophe, there will be -- we expect more competition in some of the areas where we are also strong. Second is with the influx of an older vehicle car park, we also believe that there's less pricing power in that segment. The older the car, the lesser residual value, then there is a pricing topic.

But we still believe that we are, again, well positioned there in conjunction with what we can do in-house also to look to product costs and improve our margins. Also here, I think there is potential in having more aftermarket appropriate specifications to work on that margin. But in the next 2, 2.5 years, we see that there is more competition as more suppliers are trying to get their product into the market.

And then the final question I had is just on investments. The -- we've had a lot of qualitative discussion about which of the business units would get capital investment and investment in the future, but it wasn't quantified in terms of that EUR 1.1 billion CapEx number or the R&D number as well. So any sense on what proportion of the investment in the business each year will go to E-Mobility and the other segments as well would be useful?

Let me try to answer that question for the whole group. We are looking at CapEx, not as CapEx over sales as you normally do in your models. We are using a reinvestment rate, and that's CapEx related to depreciation. That number should be somewhere around 1. It can be 1.1, but in that ballpark.

Then the breakdown on the divisions is something that we don't disclose, as you expect. But you can say that for sure, the ones that are growing faster need more if they are capital intensive, the ones that are more harvest need less because they have their capital already at work. As Sascha is different than Matthias and certainly, VLS is -- has a different capital intensity. But please understand, we're not disclosing the CapEx number on a division level.

Horst?

I have a few more questions. When I add up the divisional targets, there is no discount on a revenue level. But if I look at the some of the earnings, there seems to be a kind of 0.5% to 1% risk cushion baked into it. Otherwise, I would get to something like, what is that, I calculated 7.2% to 8.6% margin if I add up the various segments. So where is the risk cushion taken, where you see higher risk, lower risk? Is it just a general risk discount that you take because something can always go wrong. Maybe you can comment on that first.

We normally use our [indiscernible] cash, as we call it, and I don't remember that there's a big risk cushion here. I can't give you.

I just multiplied the revenue targets times the margin and added it up to the group.

Well, then you probably need to add a little bit on the other. That is...

Others is below 100, cannot be it?

You can do that. But you need to clarify. I don't -- I can't, we need to go through the calculation, but I don't see a 1% cushion.

Okay.

I know our plan, but I'm not going to give you the plan. But I can say we have been very diligent to say we give you ranges that are -- have some upside and some downside.

Okay. The other question is on dividend versus debt reduction and also structure. I think, when we look at it from a broader context, then of course, there is a Schaeffler family in the background. The holding also needs cash. The situation of the holding could change when Conti is doing more disposals, ContiTech get disposed, Conti talks about a special dividend. Family situation could improve. The holding debt situation could improve.

Would that determine then also the dividend payout if it's 40% or 60%. So 5% was rather at the upper end because I think the family always needed the cash. So does the financial situation of the holding also drives then basically the payout ratio in the end?

The answer is no. The answer is, we are a company that is our typical focus is on value generation. We think that part of the value generation is a decent dividend. And we have always said it should be somewhere between 40% and 60%.

At the moment, because of the acquisition and to some extent, due to the restructuring, we're going through a phase where our typical logic that dividend should be paid out of free cash flow, free cash flow before M&A doesn't work. Because there is a significant restructuring payout. That's what Christophe showed.

So in this situation, we're not sort of 100% following this, but this is not driven by any means that the family tells us we need this dividend. We are looking at 40% to 60%. That's what we have agreed as a long-term range. And for sure, that's a function of net income.

Whatever happens on holding, we need to separate from what we're doing at Schaeffler. But I can't tell you 1 year where Schaeffler family told us what we should do. That's why we have this range to give you a good guidance on where it should land.

If there is, sort of, debt reduction, and this is not the topic for today, to whatever happens with other sister companies, then that's good for us, because it would probably also help the rating. We are seen as something that is more together. But our dividend target is separate from any debt reduction thoughts on IHO.

Then maybe just my last question. When you look at the structure of the group today, so you have good industrials out, you call it the three hedges. Makes perfect sense. But on the other hand, you would say that this structure of the group is now in a perfect shape or there could be more room for optimization. So when we look, for example, at BorgWarner, they did some time ago spin-off of PHINIA. So that would be aftermarket. Industrial is also something that could be separated. But that is something you would rule out for now? Or is it something long-term future that could become an option?

Well, I think, as I said before...

Or why not?

On your question for ZF, we have found our structure. We have a vision on what we want to go to. We have a plan. And again, at the moment, rethinking the structure again and separating something or selling something, that's not the plan. The plan is to keep it together. As I said, it's an integrated technology-driven holding. The topic on humanoids is one of the examples why it makes sense to keep things together. Because without the automotive customer relationship we have, without some of the technology that is in Automotive and Industrial Bearings, industrial and other things that come from Matthias' area like the actuators from Thomas' area, that's exactly where this makes sense.

And I'm not going to change it now on short-term ideas. When you always ask us, are we now looking after AUMOVIO? The answer is no. We have our hands full to deliver this. We're not going to change course. This is now the target for the next years to get that good in shape and make it a very well-performing company.

I would have one question more, but I want to leave the other questions -- can I ask one more? Humanoid robots. I always thought we talk about that more in the context of industrials, but you said it's more automotive even.

No, it's something -- go ahead, okay.

I just -- because you were saying 50% of a humanoid robot is basically actuator, and you can deliver various parts. When we listen to Elon Musk and what Optimus in the end could cost, I think he talked about EUR 30,000, EUR 40,000. Price might decline to something like, I don't know, EUR 20,000 to EUR 30,000 longer term. You're talking about millions of robots, right? You talk about 1 million, I think. What is the value that you can -- that you contribute? Is it 50% of this EUR 30,000 or?

Well, I can't give you the value. I can give you the content for humanoid. There, you can say that's slightly different than in cars. In humanoids, the content per humanoid is 50% in terms of bill of material driven by actuation. Typically, you have in the legs, in the arms, you have up to 30 actuators, linear actuators, relative actuators. That is a significant portion. You don't have that in cars.

So 50 -- our target sort of addressable market would be per robot much higher than per car. Now it's a function of how many robots will you get. We don't have that yet, but you can calculate, you can see there are various studies. And how much -- where can you play in this actuation thing? And that is exactly the story about components and systems that you heard today. We have all what we need. We don't need to start to invest now. We have the things that we could do.

And therefore, as I said, getting ready for this opportunity, understanding how the market unfolds, being with the right customers, be it start-ups or existing companies, leveraging everything we have on this, that's the nature of the game here.

And that is, from my point of view, a very promising opportunity. But we will not rush into this. We will do this very carefully. We are, from my point of view, at the moment, ahead of the curve with what we're doing. We get lots of questions because people more and more understand that sometimes the little things, the high-precision things will make the difference, in particular, if you can scale. Because that will be the nature of the game. This is not sort of 5,000 to 10,000 robots. If it takes off, it will be, as you said, 1 million plus.

Because I could imagine there's not one supplier to the robot, even if you could deliver 50% of the value, there's usually a bunch of suppliers. So therefore, when I did the calculation, I calculated potential business volume for you. And of course, I was sitting there was thinking, okay, the price could be EUR 30,000, but what is your share? Is it 5%, 10%? How many suppliers are on the robot?

What you can say is, if you take a typical calculation, target addressable market, that would be 50% of the bill of material of a robot. Today, the bill of material is a different one than in some years, because there will definitely be cost reduction and price deflation. What that number will be remains to be seen. But if you talk about EUR 30,000 per robot, you can then say what's the sort of value that someone generates, how much is the bill of material? Of that bill of material, 50% is ours. You can then say what's your market share for Schaeffler, how big is that? And then you get to...

Yes, what is the market share?

There is at the moment -- the business is just evolving and emerging. I can't give you a market share. What I can say, we are very actively approached by all the major players and say, can you help us. And I don't -- I'm not in the position to give you a market share.

The only thing I can say is, this is a very promising interesting business, because we can leverage the existing technology and know-how that we have across the various divisions. We will organize this properly. That's what is at the moment the stage. The more that we get serious contracts, the more we'll see what's happening with that business. But we are in a very good shape at the moment to benefit from that trend.

Which market is for you larger U.S. or China in that context?

It's the next question. I can tell you, when you talk to the Chinese, they certainly think that they will develop this faster. When you talk to the U.S., and this is predominantly Tesla, but also others, they think they are ahead. Don't forget, humanoids is not just mechanics. It's driven by the AI concepts behind this. This is all emerging. The ecosystem is not sort of final. It's still a situation where the question, what kind of technology road map is going to unfold remains to be seen. You need to be agile and very close to what's happening, and it's driven by the AI development.

Michael.

Mike Raab, again, from Kepler Cheuvreux. I have to ask for your forgiveness if you provided earlier the information I'm going to ask for now, perhaps one after the other. I just didn't realize and didn't aggregate. But in 2028, which of the divisions is still going to be cash consumptive? Or are you going to be cash positive? Are you all going to convert earnings into positive cash? Or is any of you still going to be consuming cash, burning cash?

Well, I mean, this is a number that is not part of the guidance. But if Thomas' division reaches breakeven...

It should be all right.

It should be all right. But whether we need to see how that plays out in terms of cash. What you saw is that we will need cash resources to finance the restructuring and the integration over the next years.

Sure. But I thought on an underlying basis. And the rest is going to be fine, you're saying.

Sure. The big other divisions are -- maybe Matthias takes the question. He generates a lot of cash today. As Sascha talked about his high EBITDA ratio, he brings a lot of cash today. And if you make 15% margin, what do you expect?

Well, I've seen companies doing 15%, 17% margin yet burning cash. You're different.

Not always a VLS business like this.

You're different in that regard. I agree.

So I think in the last row doesn't come...

Klaus Ringel from ODDO BHF. I don't know if you actually can comment on this, but I mean, the idea of the conversion of the share class was also to increase the free float of the Schaeffler shares. And can we still expect the 30% free float? Or is this some discussion.

Well, what I can say is that Mr. Schaeffler, when we presented the successful case, he clearly said that's a target to increase the share price -- to increase the free float, but he didn't say when. So as we know, Mr. Schaeffler, our main shareholder, he is a long-term thinker. He understands capital markets. He also understands timing. So let's see what's happening.

Okay. Second one would be on your 2035 ambition. I mean, you shared, let's say, sales ambition or sales target. Is it fair to assume that you might, let's say, move up a notch in terms of EBIT margin from the 6% to 8%, maybe to 8% to 10% by then because of the mix, you're through the restructuring, all that?

We gave you targets for '28 for good reason, because the environment at the moment is very challenging, very dynamic. It's better to be on 3 years and deliver that properly than being out too much.

The '35, I wouldn't call as a target. It's something that you should measure now. It's something internal. It's a commitment. If you want to move an organization forward so that it starts to think across the board and out of the box, what we could do as well, you need to give a little bit of direction. And that's why what we did in our strategy dialogue, we said we've allowed to think for 10 years. How would the structure look like in 10 years? And we can envisage that there is potential for around 10% of businesses that we have not even looked at today, like the humanoids, like defense and like others. That's more a strategic decision to move the whole company forward.

So is there any last burning question?

Ross MacDonald at Citi. This time on the bread and butter business, I think the key message is that you're reasonably well hedged from a powertrain perspective going forward. But just given the discussions that are going on with the European Commission around the CO2 targets, both 2030, 2035, how should we think about the up and downside to your margin targets if we see significant delay, let's say, to the ICE ban, for example. Would that be a driver of the 8% top end of the guide in 2028? But obviously, it would come with significant losses you would imagine in E-Mob. But...

Well, maybe Matthias can add something to this. I would rather be broad. I mean, we -- I think you all understood this concept of the hedge. You don't know what's going to happen with a, this regulation. Matthias is working hard on his Clipper job to convince the commission that this target is not achieving what they want to achieve. They want to achieve CO2 reduction. They want to achieve sort of more EV, but they're doing the opposite with regulation. That's what Matthias know better than I do.

But for us, again, we want to be in a position that whatever comes out of this, and that's, at the end of the day, a consumer decision. At the end of the day, in Europe, it's still the consumer who decides which car he wants to buy and which car he wants to afford. And that's, again, a function of the offering.

When you saw the IAA, someone said it, the Empire is striking back. The German ones are coming with all sorts of new cars that are attractive. So that points to competition. And there's clearly competition and also innovation on what is going to be the powertrain solution in 10 years. We don't know yet.

Therefore, and then I hand over to Matthias, being open on technology, allowing for innovation, allowing also for a combination of technology that is existing and not banning it, is from our point of view a critical aspect to drive the automotive industry forward. And I'm hopeful that this has been heard in Brussels and that we find an interesting and targeted approach to go away from this tail pipe approach where you measure CO2 at the tail pipe and rather go to something that is life cycle oriented. That would give also the VLS business another interesting potential upside. So let's wait and see what comes. But I do hope, and I know that Matthias shares is that the openness in terms of technology is something that the commission will use going forward as a guiding principle.

Perfectly answered. And on top -- on your point, would that favor us in terms of profitability, too early to answer. Because there is a lot of pressure on the cost structures. Then if it would be concluded that there is plug-in hybrid or range extender on the A and B segment, there's immense cost pressure. And I guess, it would be too early to say, well, let's relax and rely on the PTC business and E-Mob will come later. It would not change the needle too much. That's something we should look at. But first, we have to get more rationale into the regulation, and then we see what comes.

Thank you. So since there are no more questions and since we made the miracle happen and we are perfectly on time after 3.5 hours, I would like to close our today's Capital Market Day 2025, but allow me some last remarks.

As always, you will find the presentations today, a recording of today's event on our homepage. As always, if there are more questions coming up afterwards, myself, the IR team, we are happy to help. And also very important, let me once again invite you to still spend some time with us. There is a barbecue out there. There are very interesting exhibits behind us. There are drinks and there are product experts and very professional, knowledgeable Board members that are happy to answer your questions.

And let me, as the CEO, as always the last word, say one last sentence other than once again, thanking you for coming here. I want to thank Heiko and the whole team who has prepared this. You all know that this doesn't go over a weekend. It was a long journey. And I can say through this journey, we have learned much more about our company than we sometimes believe. So thanks for making this happen. Excellent job and give regards and a big thank you very much to the team.

Good morning, ladies and gentlemen, and welcome to Schaeffler Group Q2 2025 Earnings Conference Call and Live Webcast. My name is Yusuf, the Chorus Call operator. [Operator Instructions] This conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Heiko Eber, Head of Investor Relations. Please go ahead, sir.

Thank you very much. Ladies and gentlemen, I'm very happy to welcome you to our today's call on the financial results Q2 2025. The press release, the following presentation and our interim statement have been published today at 8:00 a.m. Central European Time on our Investor Relations homepage. And for sure, we will provide the recording and the transcript of this webcast after the call.

As a quick reminder, please note that all figures for 2024 are pro forma figures unless they are marked separately as reported figures and the mentioned pro forma figures 2024 and related information are unaudited. As always, Klaus Rosenfeld, our CEO; and for the last time today, Claus Bauer, our CFO, have joined the conference call to guide you through the key information in our presentation.

Afterwards, both gentlemen will be available for our Q&A session. And now without further ado, let me hand over to our CEO.

Heiko, thank you very much. Ladies and gentlemen, welcome to our Q2 call. You have the presentation in front of you, and I would, as usual, start with Section 1 and 2 and then hand over to Claus for the financial performance. If you follow me on Page 4, you have the summary for Q2. It's a solid quarter in a challenging environment for sure, sales were slightly down compared to Q2 2024, minus 2.2%.

Gross margin, more or less on the same level like pro forma Q2 EBIT margin slightly below the 3.9% of the previous year quarter with 3.5%, clearly impacted by FX impacts and also by impact from tariffs that were both not part of our guidance. And then on the positive free cash flow in the quarter, plus EUR 27 million, slightly better than expected, for sure, better than Q2 2024 that also had this well-known one-off Vitesco payment effect that was related to contract manufacturing business. And then for the first half EPS, slightly positive.

Now let me go into detail with the top line. As you all know, we published in the business performance, those parts that I look at from a CEO perspective to follow the business. And what you see on Page #6 is the breakdown in terms of sales. I think it's fair to say that this is a heterogeneous development across the various divisions and regions with some peculiar things to mention. You see that E-Mobility was up nearly 10%. We are really happy with that. That's the right direction. And I will come back to order intake and other achievements there. You also see when you go into the E-Mobility column that Europe was 9.5% up; Americas, 31% up. And then you see a drop in China and a significant growth in Asia Pacific.

To some extent, you need to see that together because we have a significant ramp-up in a platform that is located in Asia Pacific that was located in China before, and that clearly impacts the minus 21%.

Powertrain & Chassis, down, in particular, down in Europe. Nothing that should be completely surprising as the market is developing.

Lifetime Solutions, not a 2-digit growth quarter this time. You know that the business is predominantly in Europe and in the Americas. So there, we didn't see the growth rates from the past, but still it's our business with the highest margin and profit contribution.

And then Bearings & Industrial, also a pretty mixed picture. You see the 10% up in China. This is predominantly driven by wind business, that was booming there. Therefore, our decision to stay the course despite the competition there was exactly right. Minus 0.5% is certainly not what we would like to see over time, but it's in this environment, from our point of view, an acceptable result.

What you also see is, again, the logic of the 3 hedges, and that helps us to build resilience and also the right basis for future growth in selected areas.

Let me go to Page #7. That's a page that we introduced in Q1. That's for me, one of the most important ones, where we basically map together the auto powertrain businesses across the 2 E-Mob and PTC divisions. This is here without chassis, and it's comparing our sales growth in the specific powertrain types, BEV, HEV ICE against market growth coming from the S&P data. And what you see here on the left-hand side is that we are able to outgrow the BEV market.

Market growth in that first half was 37.7% and our sales growth in the first half compared to '24 first half was 50.6%, so nearly 13% outperformance on the positive. You see in half there's an underperformance and also in ICE, we did not achieve the market growth. You need to put that together with the right-hand side of the page, order intake and book-to-bill by powertrain type. There you see order intake now in the first half, EUR 8.4 billion, of which more than half comes from E-Mobility division, EUR 3 billion in the first quarter, EUR 1.6 billion in the second quarter. If you break it down by powertrain type, you see that the predominant order intake is with half, 2.6x book-to-bill, clearly points to future growth in that powertrain area.

I hope that is useful to you. And we use it to manage the transformation here. And we think that this clearly is a proof that the Vitesco acquisition was exactly the right thing to do.

Page #8, E-Mobility, strong sales growth, and further gross margin improvement. With the margin that you will see later on, we are definitely on track to achieve what we want to achieve. And I already mentioned order intake and also book-to-bill.

On the little picture on the right-hand side, you see one order intake that we're really proud of, and that's a new contract, we can't mention the name, but it's one of the Chinese new energy vehicle players that we signed in July. So it's not already in the order intake, but it's for us a significant step forward to improve our competitiveness and presence with Chinese NEV players. So E-Mobility, definitely on the positive side, strong sales growth, gross margin improvement and really very solid order intake.

On the PTC side, sales growth minus 7.3%, order intake EUR 1.9 billion, book-to-bill certainly below 1. That should not be a surprise. And gross margin more or less stable. Yes, we are certainly also impacted by certain phaseouts and the negative impacts that we have there. Don't forget, Powertrain & Chassis includes also some of the businesses that we are running down, and that has impact on the results.

Here to mention from the business side, we are proud for a significant order in the passenger car sector for a diesel ECU. So also that part of the business is alive, and we secured a long-term contract here in the U.S. for that transaction.

Let's go to VLS. As I said, slightly less positive than in the past 2 quarters, but certainly future growth against a very strong Q2 '24. The high gross margin level maintained with more than 30%. And for sure, not every quarter is a record quarter. We are investing now in a new logistics center and are positive that, that will help us to facilitate further growth and logistic efficiency in Europe.

Then Bearings & Industrial Solutions, you all remember that Q1 was a record quarter also with some operational one-off effects from inventory valuation that you can see clearly not be topped in the second quarter.

Sales more or less flattish, outperformance a little bit below where it should be. Book-to-bill here is different than in the more passenger car-related businesses. But what I can say on the positive is that gross margin improved by 1.2 percentage points. In a situation where sales do not grow, that tells you that the health indicator of the business is pointing in the right direction, and that includes a negative also from FX that is overcompensated by other positive impacts, in particular, on production cost.

So let me lead over to the Page #12 and start with cost. For sure, cost management will continue to be very important. And I can say here, although this is not on the page that our program to achieve synergies, but also to bring forward our transformation program is very well on track. And we will, hopefully, in the rest of this year, conclude all the negotiations with workers' council in a very efficient manner and then continue to execute, but we are ahead of target here and see that we can manage this further restructuring without too much noise also compared to others.

What is even more important to me is capital allocation, as you all know, most of you remember our capital allocation scheme. After the acquisition of Vitesco, we have certainly 2 aspects here. We have complexity that we need to bring down, but we also have a significant portion of capital employed that we don't really utilize as much as we should be. And that means we need to very much be disciplined on how we put capital at work and reduce our capital employed. And that's what you see on this slide. EUR 205 million CapEx in a quarter is low. It's a reinvestment rate of 0.6x.

And if all of you understand that concept, it means nothing else that we are reducing our capital employed. That's what you see on the lower part of the chart. The EUR 13 billion that we had end of the year -- end of the first quarter '25 has been reduced to EUR 12.5 billion. And you see it on the right-hand side, this is working for more or less all the divisions.

PTC contributed with EUR 200 million. Bearings contributed with EUR 150 million. VLS is flat and also E-Mobility has a slight reduction there. You may ask why is that happening? Are you not investing in E-Mob? For sure, we're investing. You see CapEx reinvestment rate above 1, EUR 87 million investment. But for capital employed, also working capital management is key. And that's the reason why E-Mobility is down because there, the change in working capital, together with the depreciation overcompensated the EUR 87 million investment into that business.

So please take with you optimizing our capital employed, being very disciplined with capital allocation, managing the portfolio in a very disciplined manner, straightforward is absolutely key for our execution program.

Let me finish my part with one slide that you have not seen so far, and I don't want to go in too much detail, but I want to share with you how we monitor integration. We are doing it with the 3 lenses that you see on this page. We are monitoring progress. That's basically completing tasks by milestone, and we can say we are definitely on track with 60% achieved by end of July.

We are also managing a specific program to reduce complexity, 6 key indicators, legal entity integration, IT system integration, processes, brand footprint and reporting. You see here that we have set up a 3-year program with 27 targets for 2027. The progress is tracked on a regular basis.

And this part here, number 2, is not just for the fun of it, it's ultimately linked to our Board compensation. So if we achieve the targets here, it's 100%. If we overachieve, it's 120%. And if we underachieve, it's a penalty of minus 20%. I can tell you, I've not seen something similar so far, but this complexity reduction program is really getting a lot of traction, and people are working very hard to get that achieved or overachieved.

And synergies, you see here is also a long-term program. We promised EUR 600 million fully realized in 2029. And here, we are around 12%. So that is also absolutely on track. Synergies are not tracked in a way that you can sort of detail by category where this goes into the P&L. We're basically tracking it by looking at all the measures that are in place because the P&L tracking of synergies is normally not really possible.

One of the things that make a difference is rebranding. I'm not going to speak too long about this. But I wanted to leave you with a little bit of insight that our integration execution is on good progress and that synergy realization is on track. I now hand over; unfortunately, for the last time; to my dear friend, Claus for the financial performance. Thank you very much.

Thank you very much, Klaus. And let's dive a little bit deeper into the numbers. On the first page in my section, you see what Klaus already mentioned, a slight sales decrease, much more important and informative is on the right side, the waterfall chart, how gross profit developed in the second quarter versus prior year. I think it is a good result that the gross profit margin is on the same level despite the reduced sales. I think it's even more impressive if you look at the waterfall chart and see the foreign exchange impact, we had negative a foreign exchange impact in gross profit of EUR 63 million versus prior year. That is mainly driven by the relative weakness of the U.S. dollar and the Chinese renminbi versus the euro. As you are aware, these 2 rounds are profit strong.

Therefore, the relative weight is reduced, leading to this effect of EUR 63 million. If you put that in relation to sales, then that's around 1 percentage point that then operationally is offset with the other elements that you're seeing in the waterfall chart.

Maybe worth to be mentioned is the also negative mix impact. That shouldn't be a surprise based on what Klaus said and what we informed you about our plans also in past calls. E-Mobility is strongly growing and PTC on the other side is reducing in sales. That has a negative mix impact for the time being until we reach the balancing point where the volumes in E-Mobility are strong enough to cover the fixed cost, but that clearly was also a headwind that is then offset with especially the production cost improvement of EUR 44 million.

Let me say one last comment towards the foreign exchange impact. You see the development of the U.S. dollar and Chinese renminbi also versus the first quarter. So both currencies weakened against the euro close to 10% in the second quarter versus the first quarter. So there's also a little bit of actually a quite significant headwind from a foreign exchange impact even on a sequential comparison quarter-over-quarter.

Now let's go to the EBIT, which is also reflective a little bit of what I just said in regard to foreign exchange impact. There, it's melted down, of course, because of the also translational cost benefits that we are getting, but it's still minus 19%. If you put that in relation to sales, it's 30 basis points that we are losing year-over-year based on unfavorable foreign exchange development. And you see it in the key aspects.

First comment here, we also told you in the past that once the U.S. tariffs are kicking in, our objective is to 100% recover with our customers, but that will happen with a time lag because we first have to pay it before we then go into the negotiation with the customers. This time led to another 30 basis points, so around the net impact of paid duties not recovered yet of around EUR 20 million, so another 30 basis points that for the quarter.

And again, that's a temporary impact that will be recovered in later quarters, but that's also around 30 basis points, which then obviously, if you would, just for the sake of comparison, at the back would bring us actually even from an operational performance level at above last year's quarter and even slightly above our midterm midpoint of our guidance for this year. So operationally, if we exclude these 2 aspects, definitely on our planned path going forward.

In E-Mobility, on the next slide, I think Klaus said everything already. Everything that has been said for gross profit is now falling also to the bottom line, minus 15.5%, of course, still significantly negative. But we are encouraged by the improvement gradient here. I think I said it last time already that based on our accounting policies that the improvement gradient is steep with volume. It's volume dependent, no question, but definitely going in the right direction. I'm not here to promise every quarter 6 percentage point improvement, but it should support the math that I explained in the last call.

Powertrain & Chassis, Klaus already indicated that there is more to be explained then on the E-Mobility side with 9.9% at the lower end of our guidance for this year. And that has to do mainly or first of all, with the volume. The volume drop is more significant than we would have expected in our planning for this year, and that is mainly due, and the headline says it to the relative weakness of the European OEMs in an overall stable market, but our exposure to the likes of Volkswagen, Mercedes, Stellantis and so on is heavier than others.

So therefore, we participate in their sales reductions over proportionally. There's also -- and I hope I'm credible in saying, I'm not normally hiding behind foreign exchange impacts. And -- but I think it needs to be mentioned there is a negative foreign exchange impact that for the total group was minus EUR 19 million, and it's hitting particularly hard here in this division with minus EUR 16 million, which is a significant impact for this quarter. There is a onetime effects that we had positively in the last year's quarter of around EUR 30 million.

So operationally, we have a gap, if I deduct that from the EBIT gap that you're seeing here around EUR 50 million with a sales drop versus prior year of EUR 200 million. That is a drop-through rate or leverage of 25%, which actually is indicating that we are managing the downturn even if that was for the European weakness a little bit faster in this quarter than we expected.

But again, a normal drop-through rate in this division would be around 40% and that we have limited it here to 25% is indicating in the right direction. I mean, it's very clear, and we said it and promised it in the past. It's a game of capital allocation and capital reallocation, and we are taking that very seriously.

And although, again, 9.9% is not our ambition level is at the lower end of the guidance, as I said, together with the first quarter, we are still strong, and we are managing the sales reduction in this division very carefully. I have to say there's one other element in the sales drop, and it's also marked down here as a key aspect. And we talked about that before already at actually Vitesco times. There's a planned phaseout for hydraulics and turbocharger, which contributed around EUR 50 million of the sales drop versus prior year. So also that phaseout is going according to plan.

That brings me to the Vehicle Lifetime Solutions division with the sales. And remember, the second quarter 2024 was by far the strongest quarter of Vehicle Lifetime Solutions last year, especially as the sales volume is concerned and to be at the same sales volume for this quarter in an environment that still indicates a strong market demand, but definitely not as dynamically as 1 year ago is a strong result. The EBIT is here safely within the guidance, especially if I look at that for the first half of the year.

But as Klaus said, a little bit lower than we got to use to I see that as a temporary impact. There is -- and I'm pretty sure you're getting tired of hearing me say that, but there's a foreign exchange impact also in that division. It's only EUR 4 million, but in the very -- in a relatively small division, even EUR 4 million is a significant impact on the margin. There's also a little bit of a tariff gap.

The recovery mechanism in Vehicle Lifetime Solutions is different than in automotive OEM. It's more a general price increase in the market. The price increases that are now in the market are projected to fully cover the impact on the cost side, but also with the phasing in of the pricing, there's a little bit of a gap for this first quarter of minus EUR 2 million that, as I said, in a relatively small division, even EUR 2 million makes a difference.

I explained it, I think, multiple times in the past that with our platform business that is growing very significantly. You see it 37% versus prior year. Still only a 5% weight, but by far, the fastest-growing segment here. And with that comes a margin dilution impact. It's obviously accretive on an absolute amount, but more to a breakeven than really 16% or 15% EBIT margin. So it comes with a margin dilution impact, but is absolutely on an absolute level, accretive.

And that brings me to Bearings & Industrial Solutions. The depiction on the left side indicates a significant EBIT improvement. I think you're also aware that the second quarter of last year was one of the weaker quarters for Bearings & Industrial Solutions.

So therefore, we shouldn't celebrate too much here, especially if you see the 5.8% versus the result in the first quarter. I think I made very clear in our first quarter call that is impacted by positive carryover impacts from last year that will phase out in the second quarter.

So I think it's fair to say that Bearings & Industrial Solutions with this special carryover effect is to be looked better at a half year basis, the half year basis we are with 7.8% EBIT above our guidance for this year. I think that's reflective of the current performance level, operational performance level, much more so than the 5.8%, which has the offsetting impact of the first quarter in it, as I explained.

So therefore, I think when you look at, on this chart, it looks positive. If you look versus first quarter, it looks negative. The truth is in the middle, we have, I think, a solid -- again, a solid performance in Bearings & Industrial Solutions division, which, there's no question, we will show further improvement and have improvement potential for the next few years. But I think we are solidly at the upper end of our guidance, if not slightly above it in this division. And therefore, good news.

Maybe interesting is -- and we mentioned that a couple of times in the past that Aerospace Bearings is strong. If you look at the pie chart and the comment beside the pie chart, Aerospace Bearings grew by 21%. It's the first time that we are showing this business division, which we created to focus on that. It's only a relatively a small segment with 6% of total sales. But here, you see it now explicitly a very strong business growth, as you can imagine, also decent profitability levels.

Let me now come back to the group as a total with the free cash flow slide. Klaus said, I think everything that is explaining the development here. The development with EUR 350 million better free cash flow than last year is a little bit misleading, as Klaus already indicated because in the last year's pro forma cash flow, there's this financing impact with payment terms with a contract manufacturing between Continental and Vitesco in it. So it is not as much more positive than last year. But nevertheless, I think it was our goal. It was our promise that we are very cash flow focused. And after a first quarter that was much less negative than a normal first quarter and now already swing to positive cash flow in the second quarter, I think is a strong message.

Klaus said it, it's mainly driven by besides the operational performance by a very disciplined CapEx management and a working capital discipline that in the past, I already mentioned, but is extraordinary good this year and this quarter. That's reflected in the waterfall chart on the right side, we see that the net working capital only changed by EUR 11 million. And CapEx for sure is -- and you see it in the key aspects as well, is below depreciation. So therefore, also a good contributor to a strong free cash flow performance.

Last but not least, cash debt profile. It's pro forma leverage ratio. Why pro forma? Because it's always last 12 months. We still don't have 12 months as a fully consolidated group in our formal reporting. So therefore, it's here pro forma added the last year's first -- the third quarter of Vitesco, which is not in our formal books yet, but 2.4 also that isn't based on what I described so far, not a surprise. It's with everything being in line with prior year from an EBITDA standpoint, mainly driven by the cash outflow in the second quarter of the dividend and will be carefully managed back towards closer to 2.0 towards the end of the year as cash flow should strengthen throughout the year.

Let me mention quickly the second bullet point here. The liquidity position is strong with EUR 4.8 billion. Please remember, we are also already holding the cash for the repayment of the bond that's also shown in the maturity profile of EUR 750 million in October. So the liquidity position will be reduced by that amount once we pay back. But obviously, without impact on the net cash position or net debt position.

So therefore, refinancing for 2025, including that bond is completely finalized. I think that's also an accomplishment. The next maturity that you see here that is also a relatively small amount with EUR 0.5 billion in 2026 is only in August. So also on the financing front, very stable and lots of room to fish for opportunities as they might come up.

That brings me to my last slide, which is only an introductory slide. As Klaus mentioned now a couple of times, and I'm pretty sure you are aware, this is my last results call. And at the end of this month, my successor, Christophe Hannequin will take over.

And before Klaus now closes with the outlook, Christophe is with us in this conference, and it's with great pleasure that I now hand over to him to introduce himself. Christophe?

Thank you very much, Claus. Good morning, everyone. Good afternoon, depending on where you might be. As Claus explained, my name is Christophe Hannequin. Starting in September, I will have the privilege to be the successor to Claus Bauer as Group CFO for the Schaeffler Group, responsible for finance as well as IT.

I have to say I'm both thrilled and honored to be joining the group at such a unique time in its history. If you look at the current transformation of our markets, our customers as well as the recent merger with Vitesco. I'm truly convinced it's the perfect opportunity to come on board at a unique moment in time.

I was lucky enough, as Claus mentioned, to join the group a few months ahead of the transition, besides allowing me to hit the ground running in September. It also gave me the opportunity to spend some time with our teams in our plants, in our R&D centers, in our regions. And I'm also happy to say or report that it confirmed everything that I felt from outside the group, being able to see it and spending time with our teams confirmed that as far as I'm concerned, I made the right choice. It's truly a fascinating company with a substantial potential that I look forward to help develop.

I look forward to making a material contribution to the group. To do this, of course, I know I can rely on the very talented teams that I've met so far. I will also bring my experience, my past experiences and try to leverage them. As you can see from the slide, I'm originally from France, but my professional background, it's a mix of experience in the U.S., Canada, France, the U.K., most of my roles with global responsibility and most of them business focused.

If you look at the types of companies that are listed there, you see one theme, which is mobility, which I define as mobility in general, is the obvious automotive experience, but aeronautics, trucks, off the road, construction equipment, defense and some experience as well in telematics and data-driven solutions. All of which are -- I find a very interesting fit in the group today and potentially the group tomorrow as well. The positions that I've had or the situations that I've been in also gave me exposure to different types of situations from growth situations to turnaround, to hyper growth, to restructuring, to driving innovation. It's really been a very interesting mixed bag, which, again, I find a very good fit and which I look forward to bringing to the table for the group.

Once again, I would like to sincerely thank Claus Bauer for his contribution to the group and on a more personal basis for the spirit of our transition over the last few weeks and months. I look forward to building on the solid foundation and the team that he is now entrusting to me, as well as building a relationship with the investors community as well through our regular interactions over the next few months and quarters. The most obvious one most likely will be the CMD in September, where we will share our road map and midterm targets.

That being said, I now hand back over to Klaus Rosenfeld, who will wrap up the presentation.

Well, thanks, Christophe, for your kind words of introduction. We really welcome you on board. I can assure everybody on this call, the transition has been very well prepared. It's running very smoothly. And I can say I look very much forward to work with you as the copilot of the transformation that is in front of us. I've seen a lot of strengths, and I think you will certainly fit very well also to the investor community.

And Claus, on the left-hand side, the Claus with the C, once again, a big thank you very much. I normally say in these instances with Schaeffler, it's like with Hotel California from the Eagles. You can check out any time you like, but you can never leave. You're leaving, unfortunately. And we will definitely stay in touch, and we admire your support, your contribution, all the work that you've done for Schaeffler to bring us where we are today. The fruits that you -- that we will, at some point, generate here are also your success, and we know that you will follow in particular, the share price very carefully.

Let me finish my part with '25. Not much to say here. We confirm our guidance for all metrics despite dealing with tariffs, trade conflicts, FX impacts, whatsoever, and we'll do the utmost possible to deliver on that promise. Outlook '26 is just the date. Christophe mentioned it. The next big one is Capital Markets Day. We all look forward to welcoming you in Frankfurt for an interesting presentation. I stop here and hand back to Mr. Eber. Thank you very much.

Thank you very much, Klaus. Thank you very much, Claus. Thank you very much, Christophe. So with this, I would say let's start the Q&A session, and I give back to the operator for the first question.

[Operator Instructions] Our first question comes from Christoph Laskawi, Deutsche Bank.

The first one would be on Powertrain & Chassis. You already elaborated on that quite a bit. Just a couple of more detailed questions there. If we look at the R&D expenses, which is close to 6% of sales, obviously, on a ratio and in absolute terms higher than last year.

Could you provide a bit more detail on why the R&D expenses need to be that high in a business like that? Is it just the chassis business that requires it because you want to grow it? Or how it could phase into H2 and potentially develop in the future? And then on the admin expenses, which have been down in Q1 year-over-year.

Now they see a sequential quite decent step-up. Is this just the tariff delay that we are seeing? Or is there anything other than that in that line? Is it just a phasing thing? A comment on that would be great.

And then the second block of questions or question will be on E-Mobility. The margin improvement that you've shown, is this largely just operating leverage and scale? Or have you introduced other measures already first benefits of the synergies, other things that you could highlight that drove the improvement we've seen?

Christoph, thank you for your questions. In regard to PTC, and we discussed that, and I think it will also be a subject of the Capital Markets Day, there's this and that's the chassis business, as you already said correctly. And with that component we have in the division that's normally really managing stagnant sales growth or even sales reductions, we have an element that is similar than our E-Mobility business on a much smaller weight in that, but that is really driving the R&D expenses in the division. So nothing else.

I would like to say so that most OEMs also adjusted their own powertrain strategies significantly, and there is room for further engine -- combustion engine platforms, which then will obviously support the sales levels and to reduce the dynamic of sales reductions there but also will then require some R&D expenses more in the application, not in the general research field.

And your second question in regard to E-Mobility, it's mainly scale and operating leverage. E-Mobility, and you might remember that from Vitesco calls in the past is also very, I'm searching for the right word, maybe volatile in regard to cost and price recoveries from the customers, which are not as linear as in the more commodity bearings business on the Schaeffler side. I'm making extreme comments here just to explain what the reason is. So there is also an effect that sometimes we have onetime payments that are larger than others. So it will not be a linear movement as I said, every quarter, 6 percentage points better, but it's clear.

Coming back to also maybe sets a scale in operating leverage that is also in connection to be seen with our synergies that Klaus talked about and the synergies that are ramping up in 2029, as we promised, we are on the right track here will hit and are hitting E-Mobility to -- in the range of around 50%. So that's adding to, of course, the scale, if you will, but it's a little bit different element.

Our next question comes from Ross MacDonald, Citi.

It's Ross at Citi. And firstly, all the best to both Claus and Christophe in their new roles. Three questions from me. The first one on E-Mobility. Obviously, in the quarter, grew top line 6%.

On my math, you need to grow in the second half versus the first half, 17% to be in the middle of the revenue guidance range. So an acceleration sequentially potentially in E-Mobility. Are you able to confirm such an acceleration? And then maybe you can talk a little bit about what you're seeing in the Americas given the tax credit phase out at the end of this quarter? Do you see any prebuying happening on the E-Mobility side ahead of that hard stop?

Second question on Powertrain. Obviously, the only division in the quarter below your full year guidance corridors for margin. Obviously, you mentioned in the first half, the margins right in the middle of that corridor, so no concerns as such. But could you maybe talk around the expectations from here in terms of top line and margins? Would it be fair to assume that the Q2 margin of 9.9% is likely to be the low point for the year in that division?

And then just a final question on wind. I think, Klaus, you mentioned wind in your opening remarks. There's a lot of discussion in the market around supply side reforms in China under this new tagline anti-involution.

Just be curious if you see any evidence in wind of deflation coming to an end. I know you mentioned the volumes have been very strong, but just curious how you should think about wind pricing going forward?

Thanks for the 2 questions. Maybe I'll start with the first one, and I don't want to do now a calculation exercise here, but maybe you want to revisit the 17%. If I do my math and make a first quarter -- first half, EUR 2.4 billion, a guidance of EUR 5 billion to EUR 5.5 billion for E-Mobility means EUR 2.8 billion something in the second half, and that would be over first half 2024 in the midpoint, an 11% growth and not 17% growth. Maybe you want to revisit that's -- whether my calculation or your calculation is correct.

But if you go to the lower end of the guidance, it would only be 1.3%. So I think that tells you if we continue to grow with something around 10% plus, the guidance in the midpoint is achievable. And if I see what's happening with ramp-ups at the moment that are certainly not fully there in the first quarter, again, with booked business, I'm confident that we will definitely make the midpoint.

And on the third one, in terms of wind, yes, we have seen nearly an order rush in the wind business in Greater China. Prices were super competitive for quite some time, but it's also obvious to us that if you are local, if you stay the course, if you compete with that with the Chinese players, there is a decent chance for German quality. And I think that's what we are benefiting from at the moment.

For sure, not at the same margin levels some years ago, but still at decent levels that help us to compensate other negative impacts. And on the -- for the second question, I would hand over to Claus again.

Yes. So the second question was whether the 9.9% is the low point of the year. I will not say anything like that. Again, I said that once last year, I think for industrial and then I was proved wrong. But what I will say is that PTC under the current volumes and also customer mix situations will fight on -- in the second half of the year on the lower end of the guidance range.

With a strong first quarter, we then still are not in danger of the range. But it's a fight of nurturing the chassis business that as we discussed in the prior questions with a challenging volume situation on the mature business.

And therefore, I would leave the expectations here that's more towards the lower half of the guidance than really the upper half of the guidance. On the other side, and that's not -- you didn't ask that, but I will repeat that on the other side, I'm pretty confident that our Bearings & Industrial Solutions is and will be at the upper end of the guidance range, if not slightly above. But both in a range that we don't think would require or need a adjustment of the guidance ranges.

Understood. And sorry, Claus, I was talking sequential half -- second half versus first half. So apologies on year-on-year, which is probably a better basis for this kind of calculation. I agree with your numbers.

And maybe to add one thing, Ross, on the PTC side. If you look at the half year, the margin is 11.2%, exactly sitting in the midpoint of the range, 10% to 12%. You can now do again your own calculation. If we stay at 10%, we will definitely make the guidance.

And if you consider, again, FX impact and tariff impact that was playing a role here and also include the idea that at some point in time, the compensation will kick in, then there is certainly a good sort of level of confidence that we'll make the guidance somewhere between 10% and 12%.

The next question comes from Vanessa Jeffriess calling from Jefferies.

Just wondering if you could first speak about the drop in order intake in the second quarter in PTC and E-Mobility and whether that's normal order seasonality and lumpiness or if you think that's driven by more customer uncertainty?

Well, again, let me talk about the E-Mobility first. You had EUR 3 billion in quarter 1, and you had EUR 1.6 billion in quarter 2. You don't manage order intake by quarters. What we look at is more or less the annual progression and EUR 4.6 billion for E-Mobility as a division is a strong number.

If you then see what happened with the new order that is not even in there, the special Chinese order with NEV, that points in the right direction. It's not only size in the order book, it's quality of the order book, and that's not just the question how much money you make, but also who's the customer, are we proven to be competitive with Chinese customers. And that's -- I think that's a positive story on E-Mobility.

In fact, if you ask my view, I don't look so much for order intake by division. I look by order intake by powertrain type. And if you just jump back, Vanessa, to Page 7, you see in the powertrain arena without chassis, EUR 8.4 billion order intake first half that is nicely spread across the different categories. And that's what we are looking at. It's overall a 1.4x order intake in a broad powertrain business that covers the full spectrum, certainly geared towards half. That's where we see at the moment the growth. That's also where we see at the moment good profitability. Therefore, with order intake, we are pleased that the first half was a very solid, if not positive development here.

I think, I was more so trying to ask, are you seeing any slowing in order intake because of customer uncertainty? And if so, are you seeing more extensions of programs?

We are seeing no slowing in interest, but we also very well know that we have a sizable order book that we can also be a little bit more selective here. So don't look at this only by size of the order intake, just look at this by the quality of the order book and how we deliver that order book.

And then secondly, could you just talk about the demand dynamics in the rest of B&IS ex-wind in the second half? And if you expect these to be stable or perhaps worse? And then give some detail on what's supporting the margin improvement from the 5.8%?

Well, you saw what Claus said on Aerospace. That is now broken out as a division. There you see significant demand. So sector by sector is different. I think it's fair to say that we have a macroeconomic situation in the markets where we do our business that is not really rocketing. So we are more or less moving sidewards. And there are sectors that are on the positive side and there are other sectors on the negative side.

If I may something that is a little bit more forward-looking, for sure, the whole question of industrial automation, everything that is linked to humanoids, everything that is linked to AI-driven solutions, all of that is something that will drive growth.

But on the more classical things, there is certainly not an economic backdrop that supports the growth in the classical businesses.

Our next question comes from Michael Punzet, DZ Bank.

I have 2 questions. The first one is once again on the order intake. You mentioned a very high order intake in the -- with regard to the HEV business. Can you give us a split up of the customers and the regions? And the second one is on the tariffs. Can you maybe explain a bit in more detail how you will be hit by the tariffs and how you will be compensated on a divisional level?

Let me start with the first one. You will understand, Michael, we're typically not sharing customer names. But what I can tell you, if I look at the ramp-ups at the moment, it's a good mix between the German, European, U.S. and also Asia, China names that we are seeing. But I can't give you, if please understand this, specific names. But it's a balanced mix from the different areas.

And for sure, you see a hybrid trend not only in the U.S., you also see the hybrid trend in China. And that's where it is interesting for us. And I can also say what I said in the press this morning, the fact that we have Vitesco with us helps us to improve our content per vehicle. The Vitesco products are in certain areas at higher price levels than we were used to. So the integration here and the cooperation across the teams really pays off.

The last one was on tariffs, will you do that?

Yes, yes. So there's 3 main areas where tariffs hit us in the U.S. The one is steel, and we are depending on steel imports in the U.S. because within the U.S., not every steel is produced in the quality that we need.

Secondly, within the USMCA space, we have our biggest movement of goods into the U.S. out of Mexico. We said that in the last call, it's a significant number. And not everything is USMCA compliant. And even with USMCA compliance, it remains to be seen how that develops. So we are around 80% USMCA compliant, but 20% would then be subject to the increased duties.

And the third big element is stream of finished goods and components from Europe into the U.S. and therefore, subject to the negotiation between the U.S. and the European Union. That now you asked how that hits the various divisions.

Steel would hit every division that produces in the U.S. and there is European steel, Chinese steel. So we are here talking about the 50% duty rates. Mexico is mainly actually our Vehicle Lifetime Solutions business because most of the production of our rep kits for the clutch business are produced in Mexico. And not all of them are because of country-of-origin topics, USMCA compliant.

And from the third element, European components and finished goods, here, the automotive divisions, especially PTC because of our intercompany transfer of components and the Bearings & Industrial Solutions for the import of finished goods that are produced in Europe are the ones that are the most impacted.

So the recovery mechanism, as I explained for Vehicle Lifetime Solutions is more a general price increase of everything in the U.S. That is the same for Bearings & Industrial Solutions, especially in the distribution channels for the Bearings & Industrial Solutions' OEM customers. It's more a negotiation one-on-one, sometimes part number by part number with your customers similar than in the automotive OEM divisions. I hope that explained it.

The next question comes from Stephanie Vincent, Bank of America.

The first one is just on capital allocation and a bit of an understanding about how you're thinking about things because gross debt, even if I take out the EUR 750 million obviously going to see mature later on this year has been creeping up. Your expectation for free cash flow is pretty benign. So how comfortable are you with the gross debt position?

And as we move into 2026, if cash flow continues to be benign, I know you've kept the ultimate dividend target, but do you think that you're okay with perhaps growing that gross debt position in the short run as you continue to improve some of the segment's profitability? Or could we also see a consideration of things like small divestments perhaps to keep it within a range? That's my first question.

And then also, if we could just get an indication perhaps on the segments that are quite profitable. I don't know if you've disclosed this before, but Powertrain & Chassis, Lifetime Solutions, Bearings, could give us an indication of your cash conversion ratios. And even if you don't want to go into numbers, just some general guidance about what's generating the highest cash flow and where you see that evolving in 2026 would be helpful as well.

Okay, Stephanie, 2 very important questions. Let me start with the last one. We don't give free cash flow conversion per segment. That's also a function of our segment reporting logic. For sure, our overall free cash flow situation is burdened by the fact that we have restructuring payouts for our restructuring program, the known 4,700 headcount that we want to reduce, plus also cash outflow for integration costs.

While you can adjust for restructuring provisions, you need to incorporate in your free cash flow planning the one-offs that come from restructuring and that come from integration. And that is going to continue in 2026. We are not here to talk about guidance 2026, but we can maybe during the Capital Markets Day or later explain a little bit how we see these specific flows from the restructuring and the integration program. They will come to an end for sure, when all of this is finished. But at the moment, that's something we need to finance.

And if you would deduct this and go to something that I call internally the underlying free cash flow, you see a number that is in the range of what we have done so far. So when you talk about capital allocation or free cash flow sources and uses, the sources of free cash flow are intact. Our free cash flow conversion when I deduct at the moment, the one-offs for restructuring and integration cash out is on the same level as it was before. So you can basically say we are financing this at the moment from free cash flow, and that does not leave us at the moment with a significant potential to repay that.

However, our gross debt, as you said, is definitely at a level where it should not further increase. We are managing not by absolute gross debt but the leverage ratio and the 2.4x that you see at the moment is above our midterm target range of 1.25 to 1.75.

This having said, it is very important to manage cash flow properly. And I think one of the proof points in Q2 is, we have some ample capacity available. So we can be very focused with CapEx. EUR 200 million is certainly not the normal average range for a quarter, but it's doable if you really consider how can I utilize my capital as efficiently as possible.

Would a capital allocation logic also include small divestments, for sure. The small divestments also have the side effect of reducing complexity. I can maybe finish my answer to your 2 questions with a statement about our strategy dialogue.

In no strategy dialogue that we had so far, the focus was so much on who contributes what type of cash, how do we bring the Vitesco business units that we have acquired to the same level as we have done before.

So capital allocation, managing cash flow going forward, tackling those areas with that are loss-making or that are not contributing to Schaeffler value-added. That's the nature of the game. That's what I'm looking at. And that's what also Christophe is a super companion in driving that forward. Execution counts and capital allocation is key.

The next question comes from Sanjay Bhagwani from Citi.

Thank you, Claus for such insightful and detailed conversations over the years. Wish you all the best. And welcome, Christophe. Looking forward to work with you. So yes, first question is on -- just a follow-up to Stephanie's question. Maybe I'll just rephrase it a little bit different. On the net debt, I see you are targeting at somewhere around 2.0x by the year-end. Are you able to provide some color on what -- how much of that is basically driven by the reduction in net debt itself, that is if you have something in the internal budget.

And so yes, some of the key driver where the net debt for the full year may end up. I understand the free cash flow is going to be positive, but I do understand that there are some other variables like restructuring costs and stuff like that. So that's my first question. And I'll just follow up with the next one after this.

Well, again, Sanjay, the 2.0x is at least not an official target from somewhere. But let's take it as an ambition. I'm definitely not confirming that at the moment. But that can only be achieved if you achieve 2 things. You need to generate cash flow. And I've not done the calculation here, positive free cash flow, that would reduce net debt, and that needs to come together with margin improvement.

And my target that I mentioned is more the usual for those of you that follow Schaeffler for long, 1.25 to 1.75 is a 1.5x target with a 0.25 range. Again, we are not in a danger zone here. There's nothing wrong with the 2.4. We can definitely carry this. But for moving forward for the next years, that's too high. So let's not get too excited about 2.0. That's not what I can confirm at the moment, but the drivers are clear. And I can only say you saw it in the second quarter, we have become much stricter on CapEx, and that's one of the key drivers together with very proper and disciplined management on the working capital side.

If that continues, I think we'll further reduce to 2.4. Don't forget, in a quarter 2, you always have payout for dividends. And that is not happening in Q3 and Q4. You also know that our typical sort of progression is negative in the first quarter, second quarter positive and then the big cash flow comes in. That's also a function of what Klaus said. When compensation and reimbursement comes, that comes typically also at Vitesco in the later quarters. Is that okay?

Yes, yes. That's very, very clear. So what I understood is CapEx, working capital and another interesting point is the compensation, which I think from Vitesco's part. And the second one is on -- now going back to the electronic costs and semiconductor because this was one of the big issues for Vitesco's margins, I think, in '21, '22. Some of your peers have been alluding to slight relief in these electronic costs, and they are guiding to some sort of material cost tailwinds. Are you also seeing some signs of relief there?

And I'll just add one more question to that is, there are some talks around semiconductor tariffs. I know it's too early for this, but if you have any -- if you have done any early assessments or put thought into it, what can be pretty qualitative assessment? Is it levered for you or not?

Again, let me start with the tariff. I certainly heard what President Trump said yesterday evening or I think it was yesterday. We heard so much about tariffs that we get used to this. But for sure, we'll dive deeper into this, what that means for us. I cannot give you an answer. I can say we have a very frequent exchange with semiconductor players. We just had the CEO of Infineon with us. And I would not say that there is significant tailwind at the moment that we benefit from. That would be much too early. But I can assure you, we are looking at that, also those that are new to this like myself, much more carefully. But this is not included in any type of forecast or any type of guidance going forward.

Ladies and gentlemen, that was the last question, and this concludes today's Q&A session. I would now like to turn the conference back over to Heiko Eber for closing remarks.

Thank you very much. So all that's left to say, I want to thank you for your time, for your interest in our company. As always, feel free to reach out to our IR team in case there are further questions. We already mentioned this various times, but it's good to remind you once again, we are happy to host our Capital Markets Day on September 16 in Frankfurt.

Very much looking forward to seeing you there. Thanks to the team for the preparation, as always. And also, this was mentioned several times today, but allow me on a personal note, I would also like to thank Claus for the last 1.5 years, for all the support we got and for everything I was allowed to learn. Thank you very much. I wish you a pleasant rest of the day and hopefully, some relaxing summer break. Thank you very much, and goodbye.

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

Ladies and gentlemen, welcome to the pre-close call Q2 2025 Conference Call and Live Webcast. I'm Moritz the Chorus Call operator [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Heiko Eber, Head of Investor Relations. Please go ahead, sir.

Thank you very much. Ladies and gentlemen, I'm very happy to welcome you to our today's pre-close call on the second quarter of 2025. Now before we move to the content of today's call, of course, I'm sure that you have all taken notice of the well-known disclaimer. Please note that this release and all the information herein is still unaudited and that our next quiet period will start on July 11. We are holding this call to remind you of relevant public information that have been previously provided by Schaeffler AG or is otherwise available in the market, which may be helpful in assessing our company's financial performance ahead of our Q2 2025 results on August 6.

So looking at the agenda, I will guide you through the key messages for our group and, of course, give you some more clarity on our 4 divisions. And as already mentioned, after the presentation, of course, there is the opportunity to ask questions. And with this, I would directly jump into the content of today's presentation. So on Slide #3, to start with a brief overview of the key aspects of Q2 2025. Overall, we expect sales to be at previous quarter's level, but having this said, lower year-over-year.

We will talk about the drivers of the sales development when we talk -- when we look at our divisions. Our adjusted EBIT will be slightly lower year-over-year and thus also lower than in our first quarter. This means that based on the preliminary numbers, our adjusted EBIT margin for the half year 1 is comfortably at the midpoint of our full year guidance range of 3% to 5%. Allow me maybe one comment. As you all know, we are impacted, of course, by the well-known tariff situation. And despite the fact that we are making very good progress in recovering the effects from the tariffs from our customers, there is a timely delay. So Q2 is already burdened with the tariffs we had to pay, while the recovery usually has a 3-month delay.

And therefore, Q2 result is a little bit burdened by the tariffs. Going forward, so in Q3 and afterwards, assuming that the tariffs remain on today's level, this onetime effect should disappear since the burden in Q3 will be compensated by the recovery from Q2. Regarding our free cash flow, we anticipate a significant improvement compared to our Q1 2025. So we are confident that we can reach a neutral free cash flow for the selective Q2 and also, therefore, very confident to stay within our guidance level for the full year. Now on Slide #4, let's take a look at our 4 divisions and starting with e-mobility. In a still volatile market, the trend towards electrification remains intact. There was a lot of talks over the last couple of years.

But to be fair, over the last 12 months, we saw that the trend towards electrification regained some of its speed. Year-over-year sales growth is driven by significant recovery of the market, as already said. And in fact, we have several successful launches in Europe, in Americas and in Asia Pacific. And as you all know, ramping up and executing our significant order backlog is one of the key success factors for our e-Mobility division. When we are talking about profitability, we were able to further improve our EBIT backed by the mentioned launches, which translate into higher volumes. And of course, we are also making progress on the operational excellence. On Powertrain & Chassis, sales declined year-over-year.

In particular, the light vehicle production in Europe was down 5.5% in Q2, which, of course, dragged down our top line in the last quarter. However, a large part of the sales decrease in Q2 is driven by our planned phaseout of the non-core businesses and therefore, in line with our often communicated strategy and on the long run, of course, will help us on our bottom line. As we have already anticipated in our Q1 release, we expect the Q2 margin to come in lower year-over-year and quarter-on-quarter as if you remember, Q1 saw an exceptional margin north of 10%. So when we look at the expected half year 1 margin, also here, it should cruise around the midpoint of our guidance range of 10% to 12%.

So in a nutshell, for PTC, we could again secure a very decent margin level despite the fact that it was slightly lower than in Q1. Taking a look at Vehicle Lifetime Solutions. We see a continued positive market environment for service businesses influenced by the growing and, of course, aging car park. If you remember, Q2 2024 was the best quarter we have seen in 2024 due to catch-up effects in supply chain. And therefore, this represents very high comps for the comparison with our quarter 2 in 2025. Nevertheless, we were able to grow slightly more compared to last year, supported by a very strong delivery performance, especially in the last 2 months.

The strong Q2 2024 EBIT margin was also partly influenced by positive sales mix. However, we continue to expect a decent EBIT level that supports also for Vehicle Lifetime Solutions, our full year guidance. Last but not least, on Bearings & Industrial Solutions. Here, the market environment continues to be challenging, and this is mainly due to the economic uncertainties that are not improving in a surrounding where we, for example, still have not real clarity on the U.S. tariffs. Nevertheless, overall, FX adjusted sales performance was solid in Q2. And with regards to regional sales distribution, especially Greater China performed well, and we, therefore, could at least partly compensate for the weaker top line in other regions.

Sector-wise, especially wind and aerospace performed very well and therefore, significantly better than other sectors. The margin is higher year-over-year, obviously, underlining once more the clear improvements we see not only in selected sectors, but also with regards to the first positive effects related to our forward program. And you might remember that the division's Q1 result, as we have stated various times, was included -- was having some positive onetime effects. Nevertheless, our half year 1 result for Bearings Industrial Solutions will trend at the upper end or slightly above of our full year guidance, and we feel that this will also be achievable for the full year 2025. If we move to Slide #5, talking about the targets for the full year.

We confirm our guidance for all metrics. At divisional level, adjusted EBIT in PTC and Vehicle Lifetime Solutions is anticipated to come in at the midpoint of their respective target ranges. As said before, Bearings Industrial Solutions should be trending at the upper end of the range, while e-mobility, as we have already indicated in our Q1 numbers, will presumably be at the lower end of our guidance range. So before we now jump into our Q&A session, just one short notice. After the call, as usual, we will distribute our consensus sheet. And as always, we would be very grateful for your contribution and your estimates if possible, already until Monday next week after close of business.

And now let me hand over to the operator for your questions.

[Operator Instructions]

And the first question comes from Christoph Laskawi from Deutsche Bank.

Two, if I may. So the first one would be just on the tariff effect that you highlighted with the lag effect. Is it fair to assume that this is predominantly in the PTC division as this would be -- as e-mobility is not as much impacted from this right away, I would assume, just from the regional exposure? And then could you just remind us on the sequential building blocks for the Bearing & Industrial Solutions margin? How much was in Q1 sort of the catch-up effect from a weaker Q4? And what are the negative drivers Q1 to Q2? If you could provide rough sizes, that would be appreciated.

No, thanks, Christoph. So on -- on your first question, yes, the biggest part of the impact from tariffs we see on Powertrain & Chassis. A smaller part is also impacting our Vehicle Lifetime Solutions business since especially for this business, not all products are localized, but the bigger chunk of the impact is on the PTC side. And regarding your question on Bearings and Industrial Solutions. So you remember, we had a Q1 was slightly above 10%. Very rough. There was roughly 1% that I would attribute to effects that could have also been shown in the Q4 2024. So carryover effects and a similar amount where we had impacts due to inventory valuation. So I hope this helps to clarify.

And the next question comes from Stephen Benhamou from BNB Paribas.

The first question is regarding the FX impact in Q2. What should we expect in terms of impact in Q2? And what's your assumption for the full year based on the spot rate? The second question is on the tariff again. So you've mentioned earlier that there was around EUR 3 billion of trade flows, sorry, impacted by the current trade tariff policies. Could we have an indication of what could be the impact in Q2, just to anticipate what could be the full year impact? And last question is about the guidance. So your guidance is for the moment based on GLVP decline of 1.7%. S&P revised up its estimate to minus 0.3%. So are you now more comfortable with the upper range of the sales guidance given the latest update in terms of GLVP volumes?

Thank you. So maybe let me let me start with the FX impact. I have to apologize since we are still talking about unaudited numbers, I will have to ask you for your patience. So FX impact, we would comment during the Q2 call. So I hope you can understand. Regarding the tariff impact, we have -- in Q2, we had a low triple million impact from -- negative impact from tariffs. And as I mentioned, we are very confident that we can, I'd say, fully recover this impact now in Q3. The last question on the outlook for this year. Agreed. We see that according to S&P, there might be some upwards potential.

Nevertheless, since the call-off horizon that we receive from our customer is significantly lower than it was in the past. Now historically, we normally had quite good visibility for 3 to 6 months. At the moment, we don't get any better call-off numbers than for the next 4 to 6 weeks from our customers, which shows that there is still a lot of uncertainty also on the customer side. And therefore, for now, we feel that it's -- that we are well advised to keep the guidance where it is today. And for sure, we would not be sad if volumes in the second half would turn out to be a bit stronger than what we see at the moment.

And the next question comes from Vanessa Jeffriess from Jefferies.

Just first on e-mobility. I was wondering what are the factors in the second half that give you confidence in getting into the guidance range? And how much is R&D reimbursement versus your own actions?

So the -- let's start with the R&D reimbursements. The good thing is that over the last -- over the course of the last 1.5 years, we did quite some effort to make sure that we don't get all the reimbursements just in the very last quarter because then you always run the risk that the one or the other customer might slip over to the next year. So we were able to prepone or to, let's say, level it a bit better over the second half of the year. So of course, a part of the anticipated improvement to get us within the guidance range is driven by the -- not just expected, but by the contracted R&D reimbursements.

The second part, and frankly speaking, the bigger part is really coming from volume and accomplished ramp-ups. -- since typically in the first 3 to 6 months after you ramp up a new project, you are facing higher ramp-up costs that, of course, are normalizing over the course of the year. And especially what we have seen now with the launches we had over the last 3 months, the launches went really smooth. And that, of course, is helping to avoid unwanted onetime effects. So volume-wise, we would still hope that the market recovery continues and might -- and hopefully continues to speed up a little bit. But it is, I think, good that we have it in our own control to reach our guidance range with e-mobility, and we are not so much depending just on a stronger market recovery.

And then just on VLS, a lot of the growth seems to be coming from Asia Pacific, where the margins are a bit lower, I think. If we keep seeing that growth come from APAC, is there any risk to the full year guidance?

Maybe we did a mistake in our previous communication when you get the impression that our margin in Asia is lower than in the rest of the world. I can assure you this is not the case. So if we get some tailwind in Asia, that will contribute to our bottom line development, same as if the tailwind would come from any other region. So there is no significant margin difference between the regions.

And the next question comes from Marc-Rene Tonn from Warburg Research.

Just to come back to the tariff effect, just to make sure that I understood that right. You said it was a low 3-digit number as an adverse effect or putting...

Low double-digit EBIT number. So I hope I can.

Low one, right? Low double digit?

How do I express this in a nice way. Low to midsize. Does this help?

Okay. Yes. I think because otherwise, I mean, the underlying margin would have been very strong in the second quarter. So that's just what I wanted to make that clear. And second question would be a bit on the Powertrain, let's say, sales decline. I think when I look in the first quarter, FX adjusted, I think it was down about 11%. When we think about the second quarter, should we assume, let's say, a similar magnitude in a year-on-year comparison? Or is there anything materially different?

So sales-wise for Powertrain, it is pretty much on the same level like our Q1. So in absolute terms. And as said, a part is, of course, coming from the weakness we see, especially in Europe. Frankly speaking, we, of course, still see that also in China, despite the fact that range extended cars are picking up a little bit, but we still -- we see an unbroken trend in China to BEV cars. So there is no real help on the Chinese market.

And really, the biggest driver is the fact that we are now more and more seeing the expected and actually wanted effect from phasing out the non-core businesses, and that's mainly the non-core business that was -- has been inherited from Vitesco. So on the turbochargers, for example, this is now really taking effect since the volumes are -- the projects have reached now the end of their life. So we have reached the end of our contractual obligation. And therefore, we see the respective effect in the top line.

And the next question comes from Sanjay Bhagwani from Citi.

The 3 questions as well. The first one is on the tariffs. I think you mentioned that there will be 3 months time lag. So is this something subject to negotiations or it has already been agreed? And can there be a retroactive payment in Q3 for Q2 plus Q3? Or this is more like a rolling, so assuming the tariffs stay there. So for example, for the Q4, you get in Q1 next year. That is the first question. I'll just follow up with the next one after this.

So I mean, you're right. So it is rolling. It is Unfortunately, not as easy as it looks. It's not about -- so much about whether the customer agrees or disagrees that we get compensated for the tariff impact. On that side, we are clear with most of the customers. So there is a general agreement that we get refunded for the tariff impact. The actual doing is what it makes a bit more tricky because basically, the customers would like to have -- would like to see a proof basically on a part number level.

So to put together this information to have it verified by the customer and then to get compensated finally, that's what I meant with this roughly 3 months time delay between the time when we are actually paying the tariffs and when this administrative execution of the recovery is eventually done. And therefore, we will not see a situation or most likely not see a situation that in Q3, we see the recovery of Q2 plus getting the direct payments for Q3, but it will be more like a rolling thing. So Q3, we get the money for Q2, Q4, we get the money for Q3 and so on and so on. So that's a little bit the logic.

Understood. That's very helpful. And the second one is on the cash flow. What's driving the significant improvement in cash flow? And is it fair to say because you will also receive the payment for the tariffs, which you incurred this quarter and you didn't. sequentially, do you expect the cash flow to be better like Q3 and Q4? If you can provide some color there?

No. I mean, you remember our guidance on the cash flow was minus EUR 200 million to 0. We already indicated in our last call that, of course, it's our ambition to not end up at the lower end of this guidance range for various reasons. And having started the year with a, let's say, normally seasonalized pattern with a significantly negative cash flow, Q2 now significant improvement.

And we expect that this improvement will continue. What we have to keep in mind also Q2 and the following quarters, they are still impacted on the cash flow side with cash out for the integration costs and for the forward program. So that remains unchanged. But the cash generation ability of Schaeffler is still intact. So the operative cash flow is still as strong as it used to be over the last years.

Helpful. And the final one is on -- I understand Q3 has just started. And I think you mentioned normally maybe it's like 3 to 4 weeks of call-off visibility you have. Have you seen anything unusual in any of the regions which you think could be worth flagging?

No. I mean where we continue to be optimistic on the industrial side is China. So what we see at the moment is that the nice performance that we have seen, especially in Q2 can be sustainable. So that's, I think, good news. On the automotive side, the pattern is unchanged. So we see Europe still under pressure. We see that the stocking for pure EVs is picking up again. That's basically a mix of people rediscover their law for EVs and of course, the increased number of ramp-ups in the industry.

So the available models are increasing month by month. Other than that, the big question mark with regards to market development remains the U.S. would dare at the moment to make a prediction on how the U.S. market will develop over the next months. It remains an area of uncertainty, I would say.

Ladies and gentlemen, this was the last question. I would now like to turn the conference back over to Heiko Eber for any closing remarks.

Thank you very much. So as always, I would like to thank you for your time, for your interest in our company. If there are any questions, please let us know. Final reminder, Q2 numbers will be published on August 6. As said, we are very thankful for your contribution to our consensus. And with this, all I -- all that is left to say is a big thank you to our team for preparing the documents and setting up the call. So thank you very much. Have a nice rest of the day and talk to you soon.

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