Schaeffler Aktie

Ladies and gentlemen, welcome to the Schaeffler AG Update Call and Live Webcast. I am Sandra, the Chorus Call operator. [Operator Instructions] The conference is being recorded. The conference must not be recorded for publication or broadcast. At this time, it is 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 today's Schaeffler update call, and thank you very much for making yourself available on such a short notice. Press releases, the following presentation have been published on our Investor Relations homepage. And before we move on to the content of today's call, I am, as always, sure that you have all taken notice of our well-known disclaimer. And for sure, we will provide the recording and the transcript of this webcast after the call. Today, Klaus Rosenfeld, our CEO; and Christophe Hannequin, our CFO, have joined the conference call. Klaus guides you through the key information in our presentation. And afterwards, both gentlemen will be available for our Q&A session.

Now let me directly hand over to our CEO. Klaus, please.

Thank you very much, Heiko. Ladies and gentlemen, thanks for joining the call. You received this morning the second press release after the one yesterday and also our little slide deck. We have basically 4 messages for you. The first one is not a message, but just a confirmation that we believe in such an environment that we are all experiencing clear priorities and experience is something important. The 3 key messages are we decided, given the weak performance of European OEMs in China that you certainly follow to do another cleanup step in our E-Mobility business and have as part of our Q3 results, booked a one-off charge of EUR 220 million that will be implemented in the fourth quarter up to around EUR 240 million.

This is there to proactively reduce risk on the balance sheet and will result in a 2-digit million relief in our P&L for E-mobility going forward. So a proactive move to tackle the situation we have there. Some of you remember, we did a similar transaction last year in the fourth quarter, given the situation in the Americas. And I think this is the right way to deal with the headwinds that we have that are not temporary, but probably more a continuous trend that we need to deal with.

Let me say already here, this is -- does not mean that we will refocus away from China. The opposite is true. We want to continue with our E-mobility strategy that has a strong element of gaining business with Chinese OEMs, and Thomas is very well committed here to improve order books also with Chinese customers. The second thing was part of the press release we did yesterday after also internal communication, 2 key messages on self-help. We have given you a little bit of information how we've finalized our last earnings improvement program or profitability improvement program or structural measures, as we call it, that we announced in November '24.

And I'm happy to say that we were able to implement that program faster and also more rigorously than expected. We'll come to the details in a moment. And on top of this, triggered by the discussions in Germany about the pension reform where certain existing partial retirement instruments or tools would fall away. We decided on October -- sorry, on August 5 to offer to our employees in Germany according to the rules of these partial retirement programs, the opportunity to sign early retirement contracts. And I'm happy to say that we overachieved our target of 1,300 by nearly 500 contracts. These are not contracts that we want to conclude. These are written contracts properly concluded that we can now execute. And I will come also back on the financial impact of that element in a moment.

And number three is -- we decided also to share with you latest news on humanoids. The new growth area is further improving, and we were able in the last weeks to improve our order book to EUR 400 million with 2 new Chinese customers placing production orders. And on top of this message #4, we decided to pre-release our preliminary Q3 numbers for the key figures. And I think these are in an environment that is challenging, solid figures, in particular, when you look at free cash flow that came out with EUR 260 million plus in Q3 2026. On that basis, I think you will not be surprised that we confirm guidance and also our midterm targets.

Next page is just a repetition of our 3 key priorities: E-Mob recovery, self-help and portfolio optimization and then new growth, in particular in humanoids, but also in defense and other areas. Let me come to the cleanup transaction on the next page. As I said, driven by the market development in China, where European OEMs are losing more than expected starting or accelerating in the summer. We took basically 2 sets of measures. We basically addressed overcapacity and due to the continued volume reductions, SOP shifts and also in some areas, project cancellations and said, tackle this by a write-off by also looking at capitalized R&D and other elements, and that's the main part of the extra charge that we took.

And at the same time, we said there's also a need for -- in some areas for portfolio streamlining, and we decided to exit thermal management system business. That doesn't mean that we exit the complete thermal management systems -- sorry, the thermal management business, the module and component business will stay as it is. But that's another sign that we say where we cannot make money going forward, it's better to exit the business, and that's part of this EUR 240 million one-off charge in 2026 as well.

As I said before, the transaction will result in a double-digit euro million positive effect on EBIT in the subsequent years. This is part of our strategy to rightsize E-Mobility. We see that there's ample opportunity in Europe at the moment, driven by the higher oil prices and also by the subsidies. So it's really important here to find the right balance between cleanup and further growth. I can only say here, as you also see from the margins later on, we are committed to bring E-Mobility across the line as we articulated in our revised midterm targets.

Page #6 is then priority #2, the so-called self-help measures. Two main messages here. You remember the program that we announced in November '24 after the Vitesco merger was closed. We announced at the time 4,700 gross reductions to be achieved in 2029 at the latest. And what we can say today, we are more or less in a position that we can deliver this 1 year earlier. You see in these little green bubbles what was achieved also in terms of timing. You see that the green bars are the ones where people have left us already or exited the company.

So of the 3,926 in 2026, 3,715 have already left. And the lighter green bars tell you that we still have around 800 go. This is not something where we need to search for candidates, but the contracts have been signed. So we can say the program is, from our point of view, now finalized and will run off according to plan. The EBIT impact that we promised at the time was EUR 290 million. And I can say we overachieved this by more than 20%, as outlined in the press release that will come in, in the years to come. So also positive. Why did we overachieve this? Because the gross reduction number is not far away from what we promised but the net reduction number is higher, less transfers and more rigorous reduction on the net side, and that increases the number above the EUR 350 million mark.

What is also positive, and clearly, you all perceive these kinds of programs as investments, we announced for this program for the headcount reduction part, a provision of EUR 504 million, and we are able to deliver what we promised here with EUR 84 million less, and that's a positive as well. So program delivered a little bit earlier than expected with a little bit better impact and also lower one-off charges.

And then on top of this, we have this peculiar situation that one of the most interesting instruments in Germany to manage transformations and restructurings, the famous partial retirement contracts, were discussed in the summer that they will fall away. The government has not finally decided on this reform, but it can come every minute. And that's why we started already on August 5 this initiative and said, let's offer, using the terms of the November '24 program, let's offer these contracts to our employees and see what they would like to do.

And the outcome is on this page here. We were calculating at the time with 20% rate. These programs are only applicable to employees that are older than or that have birth dates after 1971. And we calculated 20%, but we came out now with a higher number. This is a staggered approach where someone can sign a contract that is either 1-year active, 1-year passive, 2-year active, 2-year passive, 3 plus 3, 4 plus 4. What you see in the right-hand side of the picture in the middle is a blue bar. The 1,768 is the number of contracts that were concluded per October 5. And of that, 1,569 are so-called 3 plus 3 contracts. That means these people are leaving with active phase being finalized by end of the year 2029. So you can basically add 1,569 to the 4,804 and you see what the reduction in future will be.

The beauty of this instrument is it has an impact on cash that is immediate with EUR 50 million in 2027 but the EBIT impact only kicks in, in 2029. It requires a little bit of provisioning because there are some onetime payments included. For these onetime payments, we have booked EUR 70 million provisioning. You can basically say we used the EUR 84 million release of provision to build the new ones. So we have built-in release of people over time. That makes it plannable, that makes it also very socially responsible to people and using that opportunity before the government closes that window was, from our point of view, the right thing to do.

Let me add one more thought here on this table on this page to the actual headcount development because for sure, you can always compensate reductions by new hires. And what you see in this little table there on the right-hand side is that since December 2024, we've reduced headcount by 6,143 in the company. All sorts of different sources for sure. This is a global number, but it tells you that we are managing the company in a much leaner way and that we are not rebuilding what we get rid of elsewhere. So I think it's fair to say we have a strong record -- track record of executing structural measures. It's always not easy to do this, but it's a prerequisite for our transformation and for our strategy to become the leading motion technology company.

Next page is then very briefly on humanoids. This is not a humanoid show today, but we thought we should share at least the latest successes. We have added 2 China-based customers that placed production orders with us, making it 5 customers that now are in series production with us. We also see that some of the customers sourcing additional products, there is significant activity here. The number of sample orders has increased to 83, what is a significant increase. We also start to count the physical AI humanoid patents. And I can say this whole area has, in terms of delivery, a lot of activity at the moment for sure. The hype that was there at the beginning is coming down a bit, but we see this as one of the 4 new growth areas that will guide us into the next years and for sure, an order book of EUR 400 million points in the right direction.

Let me go to the last page, Page #8. We decided to give you and share with you the indicative numbers for Q3. These are final numbers, but they have not fully gone through the normal process, but they are in terms of quality final, and Christophe can talk about this in a moment. What you see on this page is that we are well within our guidance ranges. Q3 with 4.2% margin is what we expected. We always said the second half will be weaker than the first half. For the first 9 months, we are cruising at 4.5%. That is exactly in the middle of the range. You see that E-Mobility has improved from minus 17.6% in the first quarter to now 13.1%. That's a gradual improvement, certainly not there where it should be, but the 9 months are also inside the guidance range. Powertrain & Chassis with a solid 10.2%, 10.8% in the first 9 months, 15.1% in Vehicle Lifetime Solutions, the Bearings & Industrial Solutions close to 9%. And that's from my point of view, something that we can clearly say is a solid print in a challenging environment.

In particular, when you look at free cash flow, yes, over the 9 months, we are not already positive, but the EUR 260 million that you see there a strong number, is a good number. And you all know that typically in our fourth quarter, we make the biggest free cash flow contribution. Let's see how this comes. But when you put all of this together, it is obvious that we confirmed our guidance. And on that basis, we also confirm the revised midterm targets. Let me finish my short presentation with the dates. This is a pre-release, as we said, on the 12th of -- 13th of October, sorry. And November 3 is the Q3 full release with much more details then we'll go on to the usual road shows and come back to you then with the Consumer Electronics Show in 2027.

I'll leave it here. I thank you for your attention, and we are ready for your questions.

[Operator Instructions] Our first question comes from Ross MacDonald from Citi.

I have 3 questions, if I may. First one is just, I guess, from my own understanding, maybe to help investors as well. Obviously, there's a small miss on the Q3, and it sounds like you're bang in the middle of the guidance, as you said, Klaus. Just can you help us understand why a pre-release is necessary because the deviation versus the consensus doesn't seem too material. So just keen to understand what exactly led to the pre-release because it sounds like there's some operationally good things happening. And obviously, there's some market weakness in Q3, but nothing really that would suggest you don't have confidence in the full year or the long-term messaging. That's my first question.

Second one, kind of linked to that, just on fourth quarter, you are basically bang in line on full year revenues if I assume no growth in Q4. The group's margins kind of bang in line year-to-date on 4.5%. So can you maybe help us -- you said the second half would be weaker, but can you maybe help us with the puts and takes on the fourth quarter? I know there's a lot of talk around reimbursements in Q4. Maybe help us understand where the group margin can track into Q4?

And then final question, just on the assumptions around the China business. How important is it for the German OEMs to recover in China? Is that a reasonable assumption? And what would it do to the '28 targets if the Germans keep losing share in China as they are? That's clear.

Well, maybe, Christophe, I would take the first one and the third one, and you could take the second one. Why did we decide to pre-release? We had a situation here that the 3 elements that I just mentioned came together, and we were ready to go with our preliminary figures, and we decided to say, why don't we share that with the market. There's a lot of uncertainty at the moment. This is definitely not a profit warning. It's also not an ad hoc statement. But we thought it rounds up the whole presentation if we give you an indication where Q3 is going to land.

So it was more this type of pragmatic thing if we go out with something on the cleanup of E-Mobility on the structural things and we decided then to add a little bit humanoids and also the final numbers, they were ready, and that's the reason why we did this. So it was more driven by what -- does it make sense for you guys to get before we have a call on Wednesday where you get ranges, give you the right numbers upfront at least for the headline figures.

China business, I don't have a crystal ball, to be honest. What I can say that the trend is there since some years that the European OEMs started with the U.S. OEMs, but then also clearly impact the European OEMs that they are reducing in China being long in the industry, it's never something that cannot be reversed. I'm sure that the big German OEMs, be it VW or BMW or Mercedes and others will think hard what they need to do there. For us, the trend as such became more obvious and also stronger during the summer break. I mean you all know the numbers, and that's why we decided to do this cleanup thing. If it reverses, fine. Will it go further down? Ross, to be honest, I can't give you a prediction here.

But I think it's good to be risk-averse. It's good to take off risk from the balance sheet and focus on what needs to happen in the future. And for us, it's obvious that we need to not only support our European customers as good as we can, but also focus on the growing Chinese OEMs also when we think about export to Europe and to Germany. Christophe, the second one for you.

Sure. I'm hoping I understood the question correctly, but to give you a bit of flavor on Q4, we are being cautious to be transparent given the context that we saw during the end of Q3, what we're seeing in -- sorry, at the end of Q2, what we're seeing in Q3, but I've tried to give you a bit of a flavor Mobility should be on the right trend. The NIS and PTC also on a good trend, but there's always a little bit of a seasonal component for these 2 activities, especially on the B&IS side. Nothing unusual, nothing that should be a point of concern as far as we are concerned.

We used to have a problem or a complicated Q4. We, again, showed that we fixed that more or less last year. So we're entering Q4 with a cautiously optimistic approach, confirming the guidance. A little bit of noise also around inflation on some raw materials. I'm sure you've heard about circuit boards and the price pressure that we have there. And to touch on the reimbursement that might have on Q4, you're correct in the sense that Q4 is typically a quarter where we tend to wrap up negotiations with customers, especially on the E-Mobility side, which tends to bump up a little bit the bottom line. It's a clear seasonality on the E-Mobility side, a little bit visible on the rest.

The next question comes from Vanessa Jeffriess from Jefferies.

Just firstly, on the third quarter numbers. As Ross said, small miss, but I think it's interesting that if you look at it versus consensus, it can actually kind of be explained by the higher loss in the other line. So I think as we think about the humanoid SOPs you're seeing, maybe you can help us out with the positive impact you'll see from those and then the offset from end-of-life activities and investment and how should we should think about the other line? Because you obviously don't guide for it, but if we say minus EUR 50 million is the quarterly run rate, it obviously has an impact.

We have not present here the full set of numbers. And would it be fair to pause that question and answer it on the 3rd of November. That would be easier, but maybe, Christophe, if you want to add some color here. Your observation is in principle correct. But you remember that there is not just new growth. There are also other elements in there, for example, parts of our special machinery building. So it's a little bit difficult to predict that number. If we shed more light on this on the third. But at the moment, I would be a little bit hesitant to put out a number here. Christophe, -- maybe you...

Exactly the same way. It deserves a more structured explanation, which we should be able to give to you on the communication on the third.

And then just secondly, on VLS. I know you said there were operational issues in the first half and you couldn't fulfill the strong demand. But it looks like from your growth in the third quarter that those are fixed. So maybe if you could just speak about if you're still seeing those issues. And if they're all fixed, should we see the same level of growth in the fourth quarter?

Well, I start. VLS is a business that is pretty stable because of its European and American setup. We have here and there a bit volatility. The issues, I think, are more or less fixed. And we saw that as usual that in the summer, there's a little bit less activity, but September was a strong month. I would say if that continues, and there's no reason to be of a different opinion, then VLS should continue in the range where it is moving at the moment. So for us, it's one of the cornerstones of the quality of our earnings. And at least what I know at the moment, as of beginning of October, it looks that they are in line with their plans.

And then last one, just on Powertrain & Chassis. I mean, obviously, it's great that you're able to maintain such a strong margin there. But Q3 much weaker than, say, Q1. When I look at that compared to the medium-term targets, I'm just wondering why does it get better? Because I'm assuming it's quite tough recently because of China, your most profitable region. Obviously, sales will keep declining around the world, you think besides the U.S. So yes, I mean, what puts you towards kind of the midpoint of that 2028 target?

Chris, do you want to take that question?

Yes. Keep in mind, when you're looking at PTC on a full year basis, you have the impact of settlement of dispute or quality issues with one specific customer that we booked that overwhelmingly impacted -- we had several divisions impacted, but the bulk of the impact hit PTC and distorts the margin that you see on a year-to-date quite a bit. For me, what PTC is demonstrating more or less quarter-over-quarter is the resilience of its margin basis. They are impacted maybe a little bit stronger also than the others on the China side over the last few months. So the market -- both the market evolution over there and our representation of the combustion engine side versus the mobility side in the overall portfolio today, not tomorrow is impacting them a little bit more than the last few months.

So if you combine the 2 impacts, and then the question will become what happens to combustion engine market in China next year and the following years. This one we're still trying to figure out. But otherwise, we have a solid performance there on the PTC side, and we believe we have the path to the midterm target between now and 2028.

The next question comes from Michael Punzet from DZ Bank.

Yes, Michael Punzet, DZ Bank. I have 2 questions. First one is on the special item of EUR 240 million. Will you receive any kind of payments, compensation payments from the OEMs because we heard from several OEMs that they have to pay suppliers compensation for lower-than-expected BEV volumes? And the second question is, what is the impact from that situation on your order book for Mobility?

Well, 2 important questions. For sure, if you have a situation like this where volumes fall away that were nominated some years ago in totally different circumstances. Every supplier goes and sees that he gets compensation by the customer. That's certainly not included in this transaction at the moment. That's something we need to decide how we best do this. It's typically part of a larger negotiation package, but you can be rest assured that we will go after this. The only thing I want to say here is this is sometimes between a European supplier and a Chinese customer. And yes, even if it belongs to a European group, sometimes a little bit more challenging. But yes, we will definitely see that we get this.

The EBIT impact that we are saying here positive has nothing to do with this. This is the result of the write-offs and lower depreciation in the future. Order book, what I can say is we are adjusting our order books, not just in case of such a write-down. We're adjusting them on a regular basis, reviewing the volumes, reviewing what kind of is the SOP plan still achievable. And therefore, this will be included in order book numbers on a regular basis because of reviews and recalculations. You know that I think we have shown this that we have this order book tracking with new orders coming in, orders that become revenues, but also orders that are adjusted because of lower volumes.

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. Thanks a lot, Klaus. Thanks a lot, Christophe. And with this, I guess we have reached the end of our call. Thanks a lot for your interest. Thanks a lot for making yourself available on this short-term notice. And I hope we could provide you with some additional helpful information.

You will not be surprised that we will cancel tomorrow's pre-close call because to be honest, nothing I could give you tomorrow in terms of a range is better than having a pre-release of the numbers. So again, if there are more questions, feel free to reach out to our team any time. And please be reminded that nevertheless, we will start our upcoming quiet period on Thursday this week. So any questions until then, more than welcome.

And with this, thank you very much for your time. Thanks to the team for the preparation, and have a nice rest of the day. Thank you.

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 AG Q2 2026 Earnings Call and Live Webcast. I am Aatildia, the Chorus Call operator. [Operator Instructions] The conference is being recorded. 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 call on Schaeffler's financial results Q2 2026. Press release, the following presentation and our interim statement have been published today at 7:30 a.m. CET on our Investor Relations homepage. And for sure, we will provide the recording and the transcript of this webcast after the call. As usual, I'm sure that you have all taken notice of our well-known disclaimer. And also, 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. Afterwards, both gentlemen will be available for our Q&A session. And now without further ado, let me hand over to our CEO, Klaus Rosenfeld.

Thank you very much, Heiko. Ladies and gentlemen, welcome to our Q2 conference call. Let me start with Page #3, the key messages for today. I would like to start with message #1 that you already know from the ad hoc statement we had to give according to the German rules last week. We decided to update our midterm targets driven by the market environment, in particular in the U.S. after a solid review of a first top-down plan. You all know that we do a strategy dialogue in the summer. And as a result, we challenged clearly intensively our outlook for the next years and decided that on a more realistic and credible basis, the old ranges for e-mobility were too aggressive and that triggered this change.

We have now internally given the directions for the detailed planning and that under German law constitutes an event where we decided to share that with the public. I hope you appreciate this. It created a little bit of turbulence. I understand this, but we had to follow the rules also in the best interest of our reputation with authorities and also wanted to trigger what was necessary internally to move forward with the planning cycle. So midterm targets adjusted. The key message here is we adjusted the top line but decided based on the preliminary planning work that we would stay on group level with EBIT margin and also with our free cash flow target for 2028. That's, from my point of view, a sign of strength. And it clearly shows that the hedging logic, the famous hedging logic that we explained to you several times is paying off. You can also say diversification is on our side.

Second key message, results for Q2 are good results in a very challenging environment. EBIT margin improved, while top line was more or less flat. And you see, in particular, that 2 of our divisions have outperformed well, VLS and BIS at the upper end of the full year guidance. DTC comfortably within and also E-Mobility trending towards guidance range. On E-mobility, all of you know that this is not a flat line across the 4 quarters, but the first 2 quarters are the ones where margin is more negative and that then changes in the second half of the year. So I think the results show that despite no real growth in the top line, the company is improving its earnings quality.

On that basis, we are also proud to say that our guidance for 2026 is confirmed. We are on track to deliver on all the metrics that are there despite this challenging heterogeneous and fast-changing environment. And for sure, Christophe will explain in more detail the minus EUR 300 million in free cash flow, why we are confident to bring that into safely into the range that we have guided for. I would also add one more point that was mentioned this morning as well. Apart from the usual press release on numbers, we issued another press release on a structural measures that were extended as it relates to early retirement options. Most of you know that under -- in Germany, we have a specific instrument to manage restructuring and transformation that is offered with the support of the necessary agencies and governments in Germany.

There's at the moment, discussion that, that instrument could fall away. And we have decided after considerable requests and interest inside the company from employees whether that instrument would still be available to offer that instrument again. This is already agreed with workers' council and the necessary colleagues there. And that gives us another opportunity to optimize our headcount and FTE across the German base. That is not only specific for 1 or 2 plants, it goes across the whole board. And we think that, that will help us again to continue with our performance optimization. We'll come back to this later. At the same time, I can say that the promised structural measures as of November 2024 are all in execution, and we are ahead of plan. This is also one of the drivers for the performance in BIS.

Last but not least, our new growth strategy also starts to pay off. We have promising new growth opportunities. The new number that we are publishing for the first time is the order book for the humanoid business. I think we are the first ones to do that. This is, ladies and gentlemen, a conservative number, conservative in particular, because we have applied significant haircuts on the numbers that are given to us also with the experience that in such an environment, things will need a little bit of time to be really projectable. So haircuts here are above 50% to be on the safe side. It's a well-balanced portfolio. One name is mentioned here, Champagne, the 2 others we cannot mention. These are U.S. names. Also the products behind this is well balanced. And I can say that all of them have SOP in 2026 or at the latest in Q1 2027. So we felt that this gives you another good data point to measure success and how we are progressing, and we have decided to publish changes in these order books on an ongoing basis going forward. That is my fifth key message.

Let me now go quickly through the other slides so that you have time enough for questions. This is the old midterm targets that were communicated in 2025, September, as you know, just as a point of reference. And on the next page, you see what we have done. We lowered the top line from 27%, 29% to 24%, 26. That's quite significant. And the major contribution here comes from E-Mobility and Bearings & Industrial. On the margin, we have stayed where we were 6% to 8% on free cash flow as well. And you saw that subsequent to the top line change in E-Mobility, we lowered the EBIT margin range from minus -- from above 0 to minus 4% to 0. That's clearly for you, probably a disappointment, but don't get this wrong. This doesn't mean that we give up on profitability in E-Mobility.

I'm firmly convinced that this is possible. But what you see later on is that the work on the cost side is well underway. Top line clearly helps. But at the moment, the most important figure is gross profit, and that points clearly in the right direction. We left the 0 because you can imagine that if you are in my position, while I'm rather with my 60 years now approaching the end of my career, and this promise was an important one, I was not really happy about this, but I can assure you that we will do the utmost possible to bring this across the breakeven line, but we also needed to be realistic, and I hope that you appreciate that realism.

You see on the top line also a little softer Bearings and Industrial Solutions, also a result of the environment, not so much of the Schaeffler performance as such. And then you see that we have increased the guidance -- the midterm target, sorry, for Powertrain & Chassis by 0.5 percentage point and also for Vehicle Lifetime Solutions. This is exactly what I said before. Here, you see the power of our diversified model. And due to that change, 6% to 8% should be our midterm target or is our midterm target. The rest is unchanged. And with that, I would go into the results.

Q2, as I said, a good result. Why do I say it's a good result, flat growth and still gross profit margin improved by 1 percentage point. Midterm EBIT margin also improved by 1 percentage point to 4.5%. Free cash flow in the quarter, still negative. Christophe will comment on this and EPS positive EUR 0.10. This is clearly not the end of our efforts. We want to do more. We want to continuously improve, but this sits from my point of view, very well in our trajectory towards the year-end and what we promised also for guidance. You can all read the details here, and Christophe will explain them in the second part of the presentation. We go forward.

And on the next page, you see the sales growth. I don't go into all details, but the minus 0.3% clearly summarize a heterogeneous development across regions and divisions. You see in region Americas, 2.9% growth. You see that China was rather weak. You see Asia Pacific positive -- and you see E-Mobility plus 9.4% in such an environment, that's not a bad result, while the others, except for Barings and Industrial were slightly below the previous year quarter. So all in all, that is acceptable to us, in particular, in this environment.

On the next page, you see the famous one on the powertrain alternatives. And I'm happy to say here in the first half 2026, we outperformed in BEV with 9.4% more growth than the market growth, 20.7% to 11.3%. You also have in the back of the details for the quarters. H was nearly there, slightly less than the market. That's clearly also a function of what's happening in the regions in ICE, more or less on line. So in total, in line with the market, but a positive development in BEV. And this is also exemplified by the order intake where book-to-bill in our -- in the BEV product was 1.6x, while the others were below 1x. This is, again, pointing into the direction of why E-Mobility is important to us and why we are confident that we can also outperform in the future.

Let me go to the next page. and do all of them quickly. E-Mobility here, I mentioned the key numbers. And I said the ramp-ups in Europe are successfully happening also in Asia Pacific. There are here and there, and Christophe will answer these questions, the one or other one-off positive effect. The order intake at the moment is a little lower than in previous years due to continued market uncertainty. But I can say with an order book that is still safely above EUR 30 billion, I can say we have enough to do that we are not dependent on any new orders at the moment. And what I really would like to point out here is the improvement in gross profit margin Yes, 6.9% for a second quarter is not enough to make it a true success story, but the direction is clear, and this comes in particular from increased productivity.

Let me go to the next one, PTC, minus 5% growth, to some extent, also by phaseouts without the phaseouts, minus 2%. So that means we are holding up quite well against these challenging market conditions. Don't forget the transition from combustion engine to e-mobility and electrified powertrains is still ongoing. The order intake goes along -- has to be understood along the same lines. There is, from my point of view, with 0.8x we are clearly going in the right direction. Gross margin is impacted by the volume decline, also by the one or other one-off effect that come from settlement with customers. So this is still to be seen against a gross profit margin of 22.4%. That's a strong margin, and we are more or less able to keep that together. The highlight upstairs shows that powertrain and chassis is not only about cars, but also about trucks, and we're making good inroads in that sector at the moment when it comes to heavy-duty applications.

Let me go to the next page. that's ELS. Very strong results, as you saw from the EBIT margin already -- gross margin further improved against the top line that was not growing. Yes, if we measure ourselves against CAA growth slightly lower. But all in all, this business is definitely on track, and we are very happy about the underlying profitability and the earnings power that this business division has.

Next page is then BIS. I also mentioned the key numbers there. Strong improvement in gross profit margin, 3.4% growth rather flat against the blended market. We were not outperforming good order intake. We have also here an interesting mix in the regions, positive development in the Americas, Europe, a little bit softer. We see a continuously strong aerospace business. Wind is still one of our best businesses, had a little bit of challenges in Greater China. But in general, we still keep up with that challenge and continue to do good business in China, but the competition is there and gross profit margin, as I said, improved quite a bit. And here, you see the effects of our footprint activities, in particular, Russia's business has done very well in terms of the consolidation of sites, trying to onborgndles, all of that is happening. And we mentioned here as well, headcount reduction of 1,650 people clearly points to the fact that our restructuring activities are starting to pay off.

Next page is then on the CEO priorities that we shared with you in the Capital Markets Day, EBIT breakeven, our self-help measures and the portfolio optimization and also new growth. Let me quickly go through them. On EBIT breakeven, I've already said on the next page, the real issue is the top line. You see it on the left. Where we are on track is our operational excellence part with a more dedicated platform approach, the idea to optimize the design to cost activities, footprint optimization, and that is what you see in the gross profit margin, but also in various product cost initiatives. R&D efficiency is addressed.

We have for this program and let me stress this for this program, the completion rate of R&D rightsizing is nearly 100% -- and we see also a very encouraging impact that is still small, but that could be increased from AI implementation in the R&D area that will improve also our time to market. And then overhead cost, yes, we further need to improve on that area, but we can definitely see that we are leveraging merger synergies. The targets for the overhead ratio are coming in. And also here, the measures are completed for this program. And we have initiated on top of this a significant initiative to optimize span of control and reduce layers.

All of that is certainly not fully visible in the numbers yet, but it gives me confidence that starting with a strong order book and starting with a -- and continuing on our performance measurement measures, we should be able to achieve our midterm targets, maybe slightly delayed, but with a continuous focus on sustainable positive profit contribution.

Let me go to the next page, and that's the structural measures. First half of this page says we are very well on track with the program that we announced in November '24. At the moment, we have can say that we have already overachieved the 4,700. So we have anticipated more interest than that number. The planned reduction in Europe is almost completed. completed means contracts signed. And then the dark green bars mean people have left the company, and we expect to realize that full program with even an increased number by June 2027 ahead of plan that shows that Schaeffler has with all the experience in the last years to manage these programs very effectively. And the second half of the page talks about what we put into the press. I already mentioned this.

You all know that or you've heard about that the German government is discussing at the moment that early retirement option that has was seen as a very attractive instrument for managing transformation will fall away. That has triggered a range of questions in Germany, what happens to this program? Is that still something that you would offer to us? You all know that this is a program that is dedicated for people at a certain age, and it's certainly something that only works if the company and the employee gives their consent.

We have decided with already approval of the Workers' Council that we would offer this again, same terms as in the existing structural measures announced in November '24. And we think that through that, we can probably reduce our headcount number by 1,300 people in the next years. You clearly want to know how that impacts the P&L and the cash flow statement. The problem here is this very much depends on how people go into this program. There are various ways to structure this. You can do it with an active and passive phase where 1 year in 1 year or 4 year in 4 years. So we offer different options. And as this is very early days, we have decided not to give you a full business case here. But what we can say is that there is an immediate positive midterm or mid-double-digit effect in 2027.

There are one-off expenses and also some expenses that we can adjust in our earnings before special items. So the program as such is an intelligent, flexible instrument to drive our transformation forward that we will now use an offer according to this time line. By end of September, we should know how many people would like to participate, and we intend to finalize the implementation. That means signing all the contracts, agreeing on everything by end of November. So when we do the next budget, we should know what that means. It is, as I said, a very helpful instrument that we are now using because we were fast with approval and start the communication to employees today to manage the transition and also the transformation going forward. This is only a German program. It applies to plans and all the admin areas. So it's blue collar and white collar and we have ample experience how to make that successful.

Then Page #3 on my key CEO priorities is the new growth. I have 2 pages here, one on humanoids. That's clearly gaining traction. Let me show that with the 3 different areas here, customers. We are actively working with 45 humanoid OEMs globally. And we are increasing our strategic investments into that ecosystem on a selective basis. New -- your robotics was mentioned lately and also humanoid AI. We are very happy with this approach that clearly gives us a competitive edge also to others. You all know this.

The product development is also something where we can report positively. The number of sample orders has now increased the 50 mark for this year 2026. And with that number, we are significantly above full year 2025. And the key focus at the moment is on production-ready scalability. Our forming technology, as you know, is one of our key competitive advantages because it reduces production time from minutes to seconds. And we can see at the moment, no one really in play who can offer that ability. Delivery is certainly the most important thing. And here, I can say, as I said before, happy to share with you for the first time an order book of EUR 350 million by end of June comes from 3 major global humanoid OEMs in 3 different regions, 7 different products and the launches with the announced partnerships Humanoid and also Hexagon are not included here.

The most prominent one that we are allowed to mention, you know that some customers are not allowing us to mention their names. It's [ Charpne ] for the iron humanoid that is famous, as you all know, where the SOP is planned for Q4 this year. Let me mention again, there was maybe a little bit of surprise because when we were asked what's the order book, we gave you a ballpark number that is not fully comparable here because we decided to put in significant haircuts that are done on a customer-by-customer basis because we want to be on the safe side. And as I said, as an indication here, the haircuts on the customer level are at least 50% in certain customers even more. So we want to be safe, and we will update that number on a quarterly basis.

Now next page is quickly on defense. On defense, we cannot give you an order book at the moment. But what I can say, the team that we have is completed in start-ups, it is always markets, technology and team. And here, we are super happy with what's coming together. Celia is a very experienced lady from the defense industry with 25 years. Manfred is a 30-year guy with Schaeffler at the end of his career, one of our most experienced technology persons that joined here, who is already making a big difference and representing also the interface to Schaeffler, and we have hired a top CFO externally with start-up experience who starts January 1. Very happy about this team and looking forward to what they bring to the table. You saw some of the latest smaller things, Del Air, you saw Spire, and I can say there are numerous players and conversations that we're having at the moment, building also an order book here that we will publish when we are ready.

Let me go to the next page. And then I hand over to Christophe To sum it all up, you know this page, we have been disciplined in our capital allocation. Investment in Q2 was nearly EUR 200 million, more or less on track with Q2. reinvestment rate below 1. So we are reducing capital employed at the moment. That stands at EUR 12.1 billion. And that is, from my point of view, also necessary to bring the SVA and also our return on capital back on track. You see where it was spent, and that is very logical compared to what I said before. With that, my first part is finished, and I would hand over to Christophe for the numbers. Thank you very much.

Thank you very much, Klaus. Hello, everyone. I will go very quickly through a couple of slides to give you a flavor for Q2. As Klaus mentioned, after a very solid Q1, Q2 is also a solid one, even though we see a few headwinds here and there, and we do have some one-offs here and there, some favorable, some unfavorable. But overall, a very good quarter for us. We mentioned it before, the sales are more or less stable year-over-year currency adjusted. But if you look at the gross profit on the right side of the slide and the bridge on the top, you see a full point of extra gross profit compared to last year same quarter.

If I look, first of all, at the negative items on the bridge, so volume would be the most prominent one. The bulk of it driven by PTC, I have to add, as expected and actually better than what we had envisioned in our budget for this year. The other point is that we are not playing at exactly the same parameter since of the -- because of the sales of some of the businesses towards the end of 2025 that were still on the basis of -- sorry, that are still in '25, but are no longer then in '26. and I will get into the division-specific volumes after. Mix slightly negative for us. That's more of a play between different programs and different levels of contribution should not be seen as a trend. Pricing, very favorable for us, a little bit helped by a one-off item linked with the settling of a customer -- long-running customer negotiation, let's describe it this way, but also coming from an improvement in the portfolio itself in e-mobility as well as very strong contribution from VLS and then to a lesser extent, but still strong from the B&IS side. So pricing policy that is playing in our favor.

Production cost, almost EUR 40 million improvement year-over-year. If I want to simplify it, I would say that half of it comes from the material side -- so the performance of our purchasing teams is what's paying off here. The rest of it is coming again from the structural improvements that we are bringing to the business quarter after quarter after quarter. So improvements in the cost structure as well as operational efficiency. On our cost of sale, to touch on it briefly, it's 2 things, a little bit of an impact linked with U.S. tariff. The main contributor there is, I think, what I touched on last quarter, which is the change that we have made to our inventory revaluation methods which was creating issues in 2024 and 2025.

We have it now under control, and this no longer impacts our numbers or not to a material level as it was quite negative in Q2 last year and skewing the readability of our numbers, it shows up here as a positive contribution year-over-year. And the last point is foreign exchange, which on the top line is quite strong, but it seems to phase out -- does phase out, sorry, at the different level, gross profit, and we'll see that it turns significantly positive on the EBIT side due to the natural hedge that we have within the group.

If I go to the next slide, we see that EBIT improves by a full point as well, so from EUR 3.5 million to EUR 4.5 million year-over-year. Most of that being carried through gross profit, as I explained on the previous slide. R&D expenses that you're showing here is a little bit misleading in terms of readability. There was a significant reimbursement from one of our key customers in Germany in 2025 Q2, skewing the basis. Of course, it does not reoccur this year, and it creates this minus EUR 29 million that actually hides the improvement made on R&D expenses and R&D efficiency up to 650 engineers actually being phased out compared to last year and an overall improvement of R&D costs and R&D development expenditures. So again, the minus EUR 29 million, not to be misunderstood. It's actually a positive impact that's hiding behind. minus EUR 12 million on SG&A.

Again, if I want to reduce it to one core topic, that would be the -- the ramp-up or the increase in speed of our S/4HANA deployment programs with more and more plants going live in 2026 and the associated expenses coming with it. EUR 25 million on others, mainly driven by an insurance topic and reimbursement that we were able to book in quarter 2 on that category. FX, as I mentioned before, plus EUR 23 million, even though, as usual, a lot of plus and minuses. If we go to the next slide, and we then take a quick look at the different divisions, Klaus already covered quite a bit, so I will be quick. Ramp-up on E-Mobility, yes, a little bit of a one-off in there, but still almost 10 points or 10% increase year-over-year, 2 points on the EBIT side.

The negative evolution that you may wonder about on the mechatronics and modules is mainly due in Q2 to the weakness in China on some specific projects that we have over there. It is not something that's widespread in Q2. And again, EBIT structurally improves as we ramp up year-over-year. even though it's again, a little bit amplified by one-off this year, drive, as you can see on the right side, doing most of the heavy lifting during Q2 in terms of scaling up and ramping.

If we go to the next slide and cover PTC, so minus 5.1% decrease year-over-year. If I was to break it down for you between what's coming from the market slowing down or the market phasing out, it would be almost 3% out of the 5.1% linked to market. The phase-out businesses also divesting some business accounts for 2.1% out of the 5.1% that you see here. Obviously, the numbers that you then see on the EBIT side have to be acknowledge as strong, robust and resilient given the volume drop to still improve the contribution to the bottom line in that context needs to be acknowledged. The bulk of the decrease hits Powertrain Solutions, that's the minus 10.9% that you see. And that's quite logic when you think about the way the market is evolving.

If we go to the next slide, Vehicle Lifetime Solutions. So I mentioned it a little bit before, slightly disappointing Q1 where we took a little bit too long to settle some customer negotiations that is now sold and was sold before the end of Q1. What we are faced facing in Q2 is a little bit of a difficulty with our own internal supply chain. The demand is there. The market is there. The customer demand for our products and offers is strong, but we struggle a little bit to deliver, which you find in the sales there. We are putting everything needed in order to compensate for that and are pretty convinced that it will be fixed over the next few weeks or months and that we will deliver on the full year commitment. That being said, EBIT itself is also very good news with 1 point of additional margin compared to last year or additional EBIT, mainly driven by somewhat of a favorable product mix, but also a very, very strong pricing policy, the benefit of which you see on the EBIT side.

On the Bearings and Industrial side, which is the next slide, again, 0.4% increase in turnover in sales, which is not a huge increase in sales, but what they then deliver in terms of EBIT versus last year, comparable last year, 3.5 points, a little bit helped by the accounting policy adjustments or the fix that we brought to that topic since last year, but also significantly supported by their own internal work on operational efficiency and cost structure, as mentioned before. If we move on to the next slide to free cash flow generation, a little bit off compared to same quarter last year. Key drivers being highlighted on the right side. Net working capital, a little bit negative, to be honest, it's a little bit of a frustration of mine.

We are actively working on this one, but we did make the decision to take a cautious approach to inventory levels given the Middle East crisis and some other supply chain topics in order to protect our customers. CapEx, as mentioned by Klaus before, a cautious approach, especially when it comes to the e-mobility side to make sure that we actually match and time the ramp-up of our CapEx with the ramp-up of the markets.

The other big item there besides the traditional ones would be the others category with a significant impact there of our restructuring cash out, restructuring program cash out as well as integration related cash out. There's also a little bit in there related timing effect on payroll and payroll taxes, which again should not be read as a trend. It's more of a timing topic between Q1 and Q2, also comparable with last year.

If we move on to the next one, you see our usual slide on leverage and the maturity profile. As you know, we tapped the bond market in May quite successfully, I must say, for a total of EUR 1 billion at very favorable terms given the context and bonds that have performed quite well since then. You see an uptick in the leverage ratio at 2.4 that is seasonal, if I may say, and will correct itself between now and year-end, where we expect to land at something very comparable to the end of last year. and it's more linked to the seasonality of our cash flow, dividend payment and bond issuance. If we move on to the next slide on the guidance, where I end the mic back to Klaus.

Thank you, Christophe. And again, I mentioned this at the beginning, we will not spend much time here, but we are confident that with the numbers that Christophe just mentioned, we will achieve our 2026 targets. You can see it there. And once again, when you take the first half in E-Mobility, 2.6x 2, we're at the lower end of the range. That shows again why this is necessary to adjust also the midterm targets. The rest is comfortably in the midpoint of the range. And on profitability, we have said what we need to say. So guidance confirmed. Next page then has the outlook with states. And I think that's self-understood. We will have an event tomorrow, a virtual roadshow with Citi and then continuous events during the rest of the quarter. With this, I hand back to Heiko, and thank you for your attention.

Thank you very much, Klaus, and thank you very much, Christoph. As Klaus already said, as a friendly reminder, tomorrow, we will host our virtual roadshow with the friendly help of Citi. So if there is additional interest, please. And in order to not lose any time, I would propose that we directly jump into our Q&A session. And therefore, I would give back to the operator.

[Operator Instructions]The first question comes from the line of Christoph Laskawi from Deutsche Bank.

I'd like to start with E-Mobility, please, more longer-term question. Outside of volume, what really needs to change in the business to make this a sustainable long-term profitable margin division? I mean at EUR 6 billion to EUR 7 billion in '28, it's clearly not small. So does the structure of the business need to change more commonality or less investments? If you could comment on that, what could be key levers to bring this even above the 0? And then the second question will be, how do you make sure that the humanoid business is not the next e-mobility in the sense that, obviously, there's more and more competition arising, there's regulatory changes. There's uncertainty on growth.

Obviously, you have less investment requirements, but I'll be keen to hear just how you prepare the humanoid business for potential volatility in calls or volumes and how you make sure that this is not, again, just hovering around the breakeven for longer? And then just a clarification question on the humanoid backlog. Just to be sure, right, the EUR 350 million only includes 3 customers, and there's more on top of that so that you are still in line with the mid-triple-digit number you gave before? Or is there any change to that?

Okay. Let me start with the last question, Christoph. Thank you very much. I confirm the 3 names. We have been -- we have applied more or less the same logic that we apply in order book calculation for automotive also with humanoid -- so it needs a signed order for series production to make it into the order book. The other potential orders that could come are not -- don't qualify at the moment because these numbers are not there. So potential orders are not in there. And that's probably the main reason why the mid number that was mentioned is not reflected here. We have for the reason to be conservative, we have taken haircuts on the numbers to make sure that in this early stage of the development of the market, we are not sitting on volumes that or expectations that do not come through. That's what I said there is a 50%, if not more headcount per customer that is decided in our internal committees where we say that's a probable amount to be on the safe side. That explains the EUR 350 million.

Why are we confident that humanoid will be a business that will make money? For sure, no one can at the moment really say how this unfolds. But as long as you count on your key strengths, and this is why I mentioned the forming technology we have as long as you are not reinventing the wheel and utilize existing processes, existing technology, if possible, even existing capacity for something like this, then that is a different situation like in e-mobility. One key driver for humanoid success will also be standardization. I think you know that we have started this actuator platform where we're saying we're going to offer not for 50 different customers, 50 different actuator types, but rather do it from a platform approach that allows for standardized solutions that is from the experience with other situations like this, a key driver for success.

And then for sure, it's pricing. And if competition becomes so tough that it doesn't pay off, I think the experience from other businesses is that you better don't buy business, but rather refrain from the beginning. So with that discipline and the things that I mentioned and also the position that we have in a market that will further develop I am confident that this will make money.

It's certainly nothing that you will see in the next 2 or 3 years in the P&L. It will rather need ramp-up and critical mass. That's what we are building at the moment. But on a long-term perspective, this should be a key game changer also for Schaeffler in its business mix.

E-mobility, do you -- why do we think that this has clearly the potential to make money on a consistent basis and in particular, on a sustainable basis. A, there is a now really conservatively valued order book that is EUR 30 billion plus despite all the cuts that we have made. That still needs to be delivered. I know that this is top line, and you said volume -- forget volume. But I also said in my little slide that the other key levers, in particular, on the cost side, and this is not just admin, it's in particular R&D, all of that, there are multiple levers that we are pulling at the moment. And I do believe with that, together with -- and Christoph mentioned that CapEx being conservatively used here.

Also here, standardization plays a key role, customer interfacing plays a key role, speed plays a key role and commerce is on top of all these aspects. And if we get that right and do not just look at single contracts, but the overall portfolio that we have and continue to develop for customers well, I think this can definitely make enough profit margin that it can contribute positively to the success of Schaeffler.

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

Horst from Bank of America. I'll start with the least important question maybe. For Christophe on taxes, I remember at the beginning of the year, you were saying that tax rate could be around 100%. It's now 60%. That is a number that we also work with in H2. And when is this tax number coming down?

A couple of points behind this one. The first one would be the situation in the German tax pool. If you look at what drives our tax rate today, it's the imbalance between what we pay in the different regions. Today, in the setup that we have, we pay -- we have a loss situation on the European side on the German tax pool, and we pay in other jurisdictions, China, U.S. are the first that come to mind, but they're not the only ones. So we are working at fixing that. Part of it comes from improving the quality of the business that's there. That goes back to our restructuring programs and the improvement of our profitability quarter after quarter.

There is a second topic on the way around R&D and cost sharing agreements in between our different regions. All of these things take time. So I would not model an improvement too fast on that topic. It's something that will evolve over the lifetime of, let's say, our midterm targets. So for 2026, I would not see a significant improvement.

But then it comes gradually down, right, towards '28. So for '28, I assume something like 40%, sounds that fair or...

That is not something that I think we are prepared to communicate on at this point because it depends on the speed at which we move on certain programs.

Okay. Fair enough. No problem. The second question that I have is related to the midterm guidance. When I sum up the various segments, I get to a revenue range of EUR 24.5 billion to EUR 27.25 billion, but you guide for EUR 25 billion to EUR 26 billion, and that is even -- or the summation of the segment is even not including the other line, which potentially is still low in '28. But I wonder why the sum of the segments is lower than the top guidance that you provide. So maybe you can provide some color on that.

Horst, I can do this. I can take that upfront. We have included what we have never done before, a little buffer on the other side on the negative that is there simply because of this environment. So far, we have never done this, but that explains the difference.

Okay. Interesting. We need to see how I cope with that from a forecasting perspective. But anyhow, the other question that I have is then related to free cash flow. So as you rightly point out, H1, your free cash flow ex M&A is minus EUR 300 million. You guide for the full year for plus EUR 100 million to plus EUR 300 million. Is it now -- I think your Q4 cash flow is always strong. There's some seasonality as well. But is it now fair to assume rather lower end of the range? And what is driving the free cash flow in H2? Maybe you can provide some color on that as well.

Christophe, do you want to take that or...

Sure. Again, it's -- Schaeffler traditionally has a very seasonal cash flow generation. Quarter 1 and quarter 2 are typically negative and most of the cash flow for the year comes in, in Q3 and Q4, you saw it last year. What distorts this a little bit are some of the cash flow linked to the restructuring, which are not completely linear during the year. We stand by the guidance that we communicated for the year, EUR 100 million to EUR 300 million. And as I mentioned before, the working capital piece plays a significant portion in that seasonality. So you should -- between the contribution from EBITDA and the improvement of the contribution from working capital. Again, we stand by the guidance that we committed to for 2026.

Okay. That's great. And my last one is more strategic one. When I look at the debate that we are currently having and every day, the perception is that companies announced that they move production away from Germany. And plus I think you at Schaeffer, you still have got something like 30% of workforce in Germany. Bosch also said yesterday, they moved more employees to Hungary. Mercedes was saying more or less the same. We know the story from Volkswagen. To what extent does that debate affect you? You announced this morning another restructuring, a small one, as you rightly pointed out. But is that basically the trend that we should assume going forward that there's more restructuring, which also maybe consumes more cash -- and in that context then also, when I look at the overall net debt and the deleverage that you maybe can achieve with your dividend, wouldn't it be the time then also to say that the dividend basically, the payout ratio comes a little bit down in order to allow Schaeffler to delever a little bit more?

It's a complex question.

Complex question. I know. Sorry for that.

But it's a very fair question. And let me try to answer this. I mean I'm not so sure whether we are well advised to just apply general trends from others on our situation. Why do I say this? We have this -- we have now finalized restructuring or, let's call it, performance improvement program #5 over the last years. The continuous execution of these programs is key, and that is, from my point of view, more or less company specific. Whether it makes sense to bring everything abroad and leave Germany completely and I'm exaggerating on purpose is something that each management team has to consider. And I think there are very strong arguments not to go to the extreme, but rather to see how can we balance, in particular, our footprint against the new reality.

Let me give you one example. You will see what happened with electricity in the last days because of the heat, all of a sudden, Romania at risk, Hungary at risk, the famous nuclear plants are all needing water. And again, I'm just using this as an example, that there are always multiple arguments if you make footprint decisions. And therefore, I would respectfully say we're not going to simply apply because major customers or competitors are saying they move everything to Hungary. We would not just follow that trend because it's a trend. What is really necessary is that you consider what you have from a long-term point of view. And that goes back to what can you afford? And for sure, you're absolutely right. We are used to present numbers on an earnings before special items figure and say all the rest is then somewhere in the below-the-line stuff. But the below-the-line stuff ends up somewhere in the unadjusted earnings number and in the unadjusted net income number. So every restructuring that you do has to be a business case in itself, and that certainly includes the cash out for restructuring.

We have now done something that was more, let's call it, opportunistic because we were just finished with the negotiations, but also with the collection of most of the people we need to fulfill the 4,700 that has now become a higher number. And we have used the opportunity to say, let's offer again this instrument that has been proven to be one of the most successful instruments in the last years, in particular, with a view that this could fall away when the German government decides so. That is more opportunistic. It's not a new program. It's an extension of the existing program, the 4,700 could become 6,000. And that, from my point of view, gives us the flexibility. This is only Germany. It is not something that has to do with we are moving clients somewhere else. It doesn't need big restructuring costs, but it's a very intelligent instrument also in the interest of the employee, in the interest of and managing the organization through these volatile environments. So we're using that instrument.

Do I exclude with that a next program for more structural things? No, definitely not. I think the only way to go is with continuous assessment what can you do next. And I think it's fair to say with what we're seeing here, there are always ideas to do things in a better way, and that will, to some extent, need some restructuring investment. Is there at the moment, thought given to the fact would we change our capital allocation externally in the sense that we're saying we want to pay a dividend and further delever. That is clearly something that we are looking at. The framework we have is flexible enough. But we are confirming, as you saw on the midterm targets of 40% to 60% as a general guidance, but that's something that also clearly needs to be discussed towards the year-end. At the moment, I have no reason to believe why we should give up on the 40% to 60%.

Why I'm saying this because the net income number, even if you adjusted for restructuring provisions is still a normal number. And my team sort of measured here is as long as we don't pay dividend too much out of substance, the interplay between deleveraging and dividend should be okay on the long run. But let's tackle that question when we get there. There's definitely no decision made here. And as long as we end up in a sort of good number within the range of EUR 100 million and EUR 300 million, then we should be fine. I'm optimistic that the free cash flow number for this year will be a solid one.

We now have a question from the line of Jose Asumendi from JPMorgan.

A couple of questions... The first question relates to the '28 targets. And some of the questions I've been receiving is, again, to revisit maybe the reasons for upgrading the guidance, specifically within Powertrain & Chassis. When you sat down, and I think, by the way, it's a very forthcoming approach to revisit the '28 targets. So thank you for that in terms of that transparency. But when you think about that level of confidence to increase the guidance on Powertrain & Chassis, what led to that thought process? And second, on the human front, can you comment a little bit the European landscape and the partnerships you have as much as you can share, I know it's it may not be easy to talk about the players. But can you talk about the partnerships and collaborations you have with Hexagon, with Humanoid ? I think it's 3 very interesting clients.

Okay. Let me first respond on the first question. Christophe, if you want to add, please feel free to do so. In this updated multiyear midterm targets are not just something that we did over a weekend and saying how can we do this best to make sure that the capital market understands it. This is the result of a detailed strategic planning for, as you know, we start the year with the technology dialogue.

We then in the summer, finish our what we call the top-down plan. That's a 5-year rolling plan where all the divisions, all the business divisions, the business units present their ideas and their cases. And from that, we then -- when we are finished with our discussion, we set the targets for the next years as sort of the top-down targets, and we put that in target letters that the people get. That these targets letter were sent out yesterday.

And when -- what we saw, again, was changes in top line, but we also saw that performance in PTC with also the changes that are happening there, you saw that the minus 5% is to some extent, also getting rid of certain or phasing out certain businesses that the underlying performance here is considerably keeping up quite well. And when we saw the number, we said there is a good reason to say in the midterm, this is going to be even better than what we expected before. That led to the 0.5 percentage point. The same is true with VLS.

VLS is performing now several quarters above or at the 15% mark. And that's why we said that's also something that we can upgrade. So this is not just wishful thinking. This is based on a discussion that we have within the Board over several rounds what's the near term and midterm here is more near term because '27, '28 is around the corner, but also part of a 5-year longer-term plan that we have. Hopefully, that gives you enough insight.

And maybe I can say for PTC for sure, the composition of that business, the strength of the business that we have in the classical powertrain world, in the hybrid powertrain world, but also with the sensors and the new things that Matthias is doing is clearly driving this. And with BLS, the main business driver is the strength of that business, proven over years, very good with logistics, very flexible when it comes to the product offering, also new things coming in. So that's the main business reason for this. In the European landscape of humanoids, yes, we are -- we have decided to support Neura.

Neura is from my point of view, one of the stars with German origin, very active, in particular on the KI side, very interesting what they do with their humanoid gyms, how they want to cooperate with us. So that's from the whole way how they approach this humanoid robot as a AI-driven or software-defined solution, that's, I think, their main strength. We are very happy to partner with them. And there are also others in that group, but we have a trusted relationship with them that allows us to really understand where they're going.

Hexagon is very interesting from a different perspective because they are more production. They have more experience in production. They are, as you know, a company that is very strong with automation. They clearly sort of match with us because we have our own large production sites. We know how important automation on the shop floor is how that all fits together.

So there, the fit comes in particular from that experience, from that shared experience. They do different types of things. They are -- as you know, their robots are more seen as sort of integral parts of an overall automation solution. Some of them don't have lags, some of them have wheels, some of them roll. So that is, I think, the strength we see there, and that's very interesting for us for these overall solutions. And then humanoid AI is the British one. What is really impressive there, that's more the start-up approach. They started with more or less nothing. We know them. We -- some of you remember, we have them on the SES show in 2026. What is, from my point of view, most impressive there, how focused they are and how fast they are in moving forward. So also there, the idea of investing in them, supporting them, also giving them a little bit of this -- let's not call it name lending, but you know what I mean, the fact that Schaeffler stands behind it gives all of the young ones something of a edge.

So that's maybe the 3 descriptions of how I see these relationships. I'm not in all the details, but I can tell you these 3 ones are from our point of view, on the one hand, complementary, on the other hand, also on a successful path to conquer the European, if not global space of the humanoid robots. And that is important. Let me finish there. You saw legislation from the U.S. where they say China is unwanted. So they will regulate much more what's been applied in the U.S. And there, our strategy being present in the U.S., in China and also in Europe is crucial and starts to pay off.

That's very interesting. As a quick follow-up, you saw the partnership between SKS and would this be something you will also be open for in terms of creating a partnership with your supplier? Or do you think that due to your technology expertise and portfolio, you would not require such a venture.

Well, I'll give you a little bit of a diplomatic answer. We are open to every partnership as long as it pays off and as long as a win-win. There's a certain limit at some point in time to the number of partnerships you can really pursue and also support. But I've spoken enough about single name, so let me please stop here.

The next question comes from the line of Ross MacDonald from Citi.

It's Ross at Citi. You've certainly given us a lot to discuss this quarter. I have 3 questions. One is long-term focus, one is midterm and then the final one just on the Q3. So on the long term, specifically on humanoids, could you maybe just give a little bit more color for people that are frankly owning Schaeffler specifically on this theme. Could you talk about the share of the bill of materials within the orders you have? Are you still tracking towards that 50% share of bill of materials within humanoids? And then specifically, there's a lot of interest around the CMD, potential mini CMD related to humanoid. Should we still expect that this year?

And then on XPeng specifically, was there anything that Schaeffler brings to the table that the Chinese players don't be very interested to understand how you're able to win business with those local Chinese players. So that's the long-term focus. The midterm one, I appreciate that you have this powertrain hedge. But obviously, the fact is that the EBIT is coming down on a change in powertrain trends. So there is a little bit of pressure there. I think that's related to the content specifically per vehicle in EMob. But could you just give us some comfort that the PTC here should have the right to win maybe higher piece prices on some of that U.S. content that has gone away in EMob but could come back in PTC? Kind of linked to Jose's question, shouldn't we see a top line boost in PTC given that hedge that you have in place?

And then the final one, just on Q3. Obviously, we're in the upper half of the margin range in the first half. How should we think about Q3? Is it progressing in line with plan? Are there any evidence of call-off volatility or any headwinds emerging in Q3?

Christophe, could you take number 2, number 3, I would start with the long term. Let me -- if that's okay, long term, again, the general parameters of our go-to-market strategy for humanoids are intact. And just to repeat them, we've always said we believe and know that, that is rather a conservative number, 1 million robots or humanoid robots in 2035. We have always said we want at least a 10% market share and our bill of material calculation that the addressable market per humanoid and yes, humanoids are changing their shape are -- there are different types of humanoids. It's not just only the fancy one that runs the half marathon or that condense or play tennis, that bill of material a number of 50% is approachable for us or addressable for us is still intact.

And it's simply explained by the fact if you compare it to a car, the battery is -- has a lower content per humanoid, but what has high content are all the joints, the ball screws, the fingers, all of that, and that number has not changed dramatically in a sense that we would change our calculation here. So 50% is addressable for sure, there is competition on the parts. But as I said before, as long as you can provide the right quality, as long as you can provide quality at a decent price in a market that is not a completely global market with local delivery and a strong name and hopefully standardized production, then that should be the case for us.

Xiaopeng, again, they weren't kind enough to allow us to talk about them. They are also a key partner for us in other products. But I cannot go into more detail. The product we are offering here is a key of our -- is a key product of our offering. And that gives me confidence that they have made their calculation why it makes sense to go for us and not a Chinese player. And I can tell you in all of what we have here, scalability and the ability to ramp up all of this and to deliver in time the right scale when -- the right number of products when it comes will be a decisive factor. And there may be people that will be able to produce things cheaper, but don't or attack sort of companies like us with low prices. But sheer functionality, reliability, scale plays an important role. That's why we think we are well positioned.

And as I said before, we're not going to buy business just for the fun of it. We want to make this something that is high volume and solid profitability. With that, Christopher, I will hand over to you for the powertrain hedge and... I mean you can make a really solid argument that at least in the U.S., what goes away on the mobility side comes back on at least partially, if not completely on the PTC side and vehicles need propulsion regardless of the technical solution. So that's what you're seeing a little bit this year for our numbers. And when you look at Q1, Q2, what is pulling in terms of sales. And also if you were to dig into the order book, you would see that, that hedge logic actually works in that the U.S. to the North American market is proving to be a very good almost business cool study case for it, if I may see it like this.

The margins that are being pulled also are strong in this despite the top line decrease coming from some of the overall market. So for me, it makes complete sense to do the adjustment that we did to our midterm targets. We call them midterm targets. But as Klaus pointed out, midterm and short term when you're only a year or 2 out, it starts to be debatable what our targets. So for 2028, it's the right thing to do, and we have very, very reason to believe that what's being put out there is the right one. On Q3, what to expect, nothing significant or nothing special that we know of. We do have this uncertainty on what is going on in China when we see kind of the mixed feeling from the Chinese market. on PTC and this temporary is something a little bit more structural. But from where I stand today and looking at our data for the short term this time for Q3 and part of Q4, nothing significant to report at this point. And again, we stand by the full year targets for the company and for the group. And that's only 2 more quarters to go. So nothing specific there.

We now have a question from the line of Vanessa Jeffries from Jefferies.

Just another one on the humanoid order book. You said your partnership with Humanoid AI is not included, which I think was a 7-digit amount, so a big order. Just I was wondering why that isn't included because it seems that the release would imply it meets the criteria you mentioned. And then just wondering if you could explain what order book means in terms of length of projects? Because I'm just wondering, given the momentum that you're seeing, when you refreshed your 2028 targets, why you didn't add another line for others? Because I know it's still small, but when we look at your '28 guidance changes, that order book is already enough to offset the cut in B&IS sales guidance. And you've just said a few times how conservative it is. So I feel like it should be there.

Well, it's a good point. When we decided on the midterm target update, we decided to stay in the format that you had for 2028. Certainly, you could argue and say, why didn't you put the fifth column here that would have made it all more complex. But we decided because 2028 is so close, we stay with that format. And when then time comes and we give a next year outlook for a different period, happy to discuss. But it has to do with the fact that the whole others and humanoids and defense and the other start-up businesses, don't forget that the fifth division is not only humanoids and defense is still early. So I think that was the right decision.

Now when we decided what to go -- what to put in the order book, we have agreed that we are very firm in terms of standards. and don't put just numbers in to make the number as big as possible. The humanoid AI contract is a contract that at least at the moment, doesn't meet all the standards, at least not for the 30th of June. It is something where we see a good order intake coming, but it's not included for the 30th of June. As I said before, we want to be strict and very conservative what goes in and what goes not in.

Okay. And then just on the 2020 e-mobility guidance, just wondering how much is attributable to the U.S. and how much to China? Because you've talked about the U.S. as the main point. But I guess in the first half, we can see that your E-Mobility decline was larger in China than it was in the U.S. So it looks like you're getting some good offset there from that 1/3 of the business that's not...

Well, when you talk about order book, the main sort of reduction that when we reassess the order book as part of the planning exercise that we explained, the main part came from the U.S. As you all know, all the large customers there either pulled their orders or reshaped them in a way that their volume assumptions became much lower. And don't forget that we are not just taking their volume assumptions into that order book, but it's a continuous assessment where we say they are asking for this. And our experience is that they normally don't ever deliver on that and then we make our adjustments. So it's a continuous process. But I can only say that I don't have a split by percentage point, but on the order book, the main assumption is clearly the main reassessment is driven by the weakness of e-mobility, BEV and to some extent, also some of the hybrid programs in the U.S.

China is something that we monitor more carefully on the running top line. And then we need to see how the market develops there. But there, the real issue is price and competitiveness. The fact that we are gaining orders in China from Chinese customers is a good one. But at the end of the day, I cannot just say X percent versus.

And just a quick follow-up one on the '26 guidance and why you chose not to change B&IS margin. I guess because we know the market is tough in the second half, but it seems that it has to go pretty wrong for margin to be 7%. And I guess the same question on VLS really.

Yes, you're right. That would have been something to consider. We have talked about this. But again, we have said we need to see a little bit more now what happens after the summer. The trends seem to be stable, and that's why we decided let's stay where we are at the moment.

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. I know there has been the one or the other question left. So we want to be respectful of time of everybody. So again, if we were not able to answer your question right now, please come back and we will do our best to get the rest of the questions answered. So for now, I would like to say thank you for your time and your interest in our company. I would like to say a big thank you to our speakers. And of course, I would like to say thank you to our team for the preparation. Again, if there are more questions, feel free to reach out to us. And with this, I wish you a good rest of the day. Thank you very much. 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 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.