Stadler Rail Aktie

[Foreign Language] Ladies and gentlemen, esteemed members of the media and analysts, I warmly welcome you to today's Stadler Rail Financial Results Press Conference. On behalf of Stadler, I would like to welcome Group CEO, Markus Bernsteiner; and Group CFO, Raphael Widmer.

They will both present the results for 2025 financial year and an outlook for the current year and beyond. Afterwards, the Group CEO and CFO will, of course, be available to answer individual questions. My name is Marc Meschenmoser, Head of Group Communications. I look forward to guiding you through this event. [Foreign Language]

[Interpreted] I now pass the floor to Stadler Group CEO, Markus Bernsteiner.

[Interpreted] Thank you very much esteemed media representatives, analysts. I would also like to warmly welcome you to the presentation of 2025 end year results. Before I present our figures to you, I'd like to give you an overview of our past financial year. In light of the framework conditions, we are very satisfied with the development of 2025. As you will see later, the relevant key figures go in the right direction. We can confirm guidance. And furthermore, in 2026, we expect further drove major growth regarding revenue and EBIT. Over these past few years, we invested a lot in technology in our sites, which has a positive impact.

With our wide product portfolio, we are excellently positioned in the market and win lots of orders, just like recently 1 month ago with a major order for the Copenhagen commuter train system. Our order backlog is growing, and we are the market leader when it comes to alternative drives like battery and hydrogen trains. This development and the future outlook show that we have taken the right measures to counter challenges.

You may remember that in 2024, natural disasters hit us hard in the Canton of Valais, in Austria and particularly in Valencia. And since August 2025, the aluminum profile suppliers' plant has been producing at full capacity again. And also the commissioning center in Durnrohr in Austria operates normally again. However, we continue to feel the impact of the devastating flooding event, which literally washed away many suppliers in Valencia, 40 of them, this had a major impact on the supply chain.

We had to rebuild the supply chain and adjust production processes. We are well on track. However, the impact of the flooding will presumably be felt by until 2027 and will lead to additional costs and delays in deliveries. Another burden is the economic situation in Germany. We've made progress there, and I will speak about that in a second. So you see that despite external adversaries, we've managed to further stabilize the business. The key figures go in the right direction.

And with this, we have now laid the foundations for further success. I would now like to give you detailed insights into the situation in Germany. The weak economic development in Germany has a negative impact on the course of business, and we feel that in many different ways. For instance, in the supplier industry, we are directly affected by suppliers going bankrupt, had to develop new suppliers, and we noticed that several suppliers no longer managed to deliver on time.

We need to compensate that. In order to secure competitiveness and the production site in Berlin, Stadler launched an extensive restructuring and efficiency program in early 2025. In the long run, we'd like to put that plant onto an economically stable foundation. And the program has shown its first impact. The production could be increased over the -- productivity could be increased over the entire value chain. We streamlined the organization and improved processes.

And in April last year, Stadler, Germany was furthermore able to sign a future-oriented collective bargaining agreement for the Pankow plant. The workforce makes a contribution and now works 40 instead of 38 hours per week. And regarding orders, we also expect positive development. The Berlin transport operator has so far ordered 484 metro cars, and we expect them to [ call off ] the remaining 1,500 cars according to the framework agreement by the end of the year.

Furthermore, we expect progress regarding the 350 trains awarded to us from the Berlin commuter rail system, appeals and other reasons have delayed this project several years. I will now give you an overview of the most important key figures, and Raphael Widmer will then explain them in more detail. We have reached the targets for 2025. And with this, we continue our efforts to improve our results at CHF 6.1 billion, the order intake is stable at a high level.

Again, the book-to-bill ratio exceeds the strategic target of 1.0 to 1.5, which is an indicator for further solid growth, revenue increase and good capacity utilization at our plants. The high order intake is reflected in our order backlog, which is at a record high of CHF 32.3 billion. And all orders have been assigned to the individual production plants. Compared with 2024, we increased revenue by 13% or by 15% adjusted by currency effects.

The EBIT margin was increased to 4.4%, which is a 1.3 percentage point increase year-on-year. So we also reached this goal. The consolidated result was almost doubled to CHF 100.7 million. I'd like to underline that we are a globally attractive employer and that we have created lots of highly qualified jobs. In 2025, we created around 2,000 jobs, meaning that at the end of last year, Stadler had over 17,100 FTEs. And in 2026, we created another 1,000 additional jobs.

In Switzerland alone, we have 6,000 full-time employees and we also further expanded our apprenticeship efforts, not only in Switzerland but worldwide. We managed to get the apprenticeship established at our U.S. site. And this brings me to the 3 reporting segments of Stadler, Rolling Stock continues to be the biggest segment. We stand for innovative and durable quality products, and we have the most extensive product range in the industry. In the Rolling Stock segment, we won orders in the amount of CHF 4.4 billion.

So the order backlog increased by 7% to CHF 22.4 billion. And revenue could be increased by 10% to CHF 3 billion. The development in the Services and Components segment was also positive. Last year, Stadler won several multiyear full-service contracts, which underlines the strategic goal to expand the Services business and to strengthen the share of recurring revenue. We were thus able to increase order intake by 55% to CHF 1.6 billion. The order backlog increased by 22% to CHF 9.3 billion.

And revenue increased by 19% to CHF 607.4 million. In the Signaling segment, the order intake was CHF 103.2 million, meaning that at the end of the year, we had an order backlog of CHF 549.9 million. And revenue was more than doubled to reach CHF 117.5 million. I would now like to present some highlights from our 3 reporting segments. Also in 2025, we were successful with our FLIRT. One example here is the Netherlands. For NS, we will build 36 trains.

And with this, Stadler has sold more than 3,000 FLIRT running in 24 countries. In the sector of urban railways, we won an important order from the Cologne traffic operator. We will supply 132 high-floor trains with an order volume of about EUR 700 million. And regarding locomotives, I would like to underline the order for NEXRAIL, a Luxembourg-based locomotive leasing company. NEXRAIL has mandated Stadler with building 200 EURO9000 hybrid locomotives.

And also when it comes to tailor-made vehicles, we were very successful. For instance, we signed a contract with TPC, Transports Publics du Chablais about 13 rack adhesion trains. And these vehicles can change seamlessly from rack to adhesion operation mode. In the segment of Services and Components, we were able to increase order intake by 55%. For instance, we received long-term full-service contracts for 27 CITYLINK trams in Frankfurt and for 7 FLIRT trains of Swedish Arlanda Express.

And for Cologne, Stadler assures the supply of replacement parts and supports the operator with Service and Support. This includes preventive maintenance and technical advice. For Hungary, the Thurbo articulated trains will be refit and given second life. And this is a financially and ecologically sustainable solution and everyone benefits from that above all passengers. In the segment of Signaling, we can equip the rack railway line from Montreux to the Rochers-de-Naye with our Nova Pro train protection system.

And for BLT, we will, for the first time, equip an urban system with the CBTC communication system. For Evo France, we supply the ETCS equipment for cross-border traffic. And in Bergen, Norway, we will also be able to equip the tram network with our Signaling technology. The project volume there is about EUR 50 million. Stadler was able to strengthen its leading position in the field of alternative drives. No other manufacturer sells that many vehicles with battery or hydrogen drive.

Many vehicles are already running successfully. Last September, we put into operation the first hydrogen passenger train in California in North America. And ever since it has been running stably between the center of San Bernardino and Redlands. Further, in 2025, we won additional orders. And here, I'd like to underline the 19 FLIRT Akku-vehicles for Central Thuringia battery network in Germany, the battery electric vehicles can cover up to 80 kilometers without [indiscernible] compared with diesel trains, this significantly reduces CO2 emissions.

And Stadler hydrogen trains will soon be running through the volcanic landscape of Mount Etna in Italy. The local operator FCE has ordered 2 tailor-made narrow-gauge trains with hydrogen drive will be built here in Bussnang, Switzerland. And the trains will presumably go into operation as from 2028. The train is the most environmentally-friendly mode of transport, which makes it part of the solution for the climate change challenges.

We continue to invest in sustainable mobility solutions, and we've set ourselves ambitious sustainability targets. Compared with 2022, we've set ourselves the target of halving our CO2 emissions by 2030. The emissions created along the value chain will during the same period, be reduced by 25%. We like to achieve net zero by 2050. Many measures are being implemented.

For instance, we are installing heat pumps, photovoltaic systems. And with our new heating system here at the Bussnang headquarters alone, we save 280 tonnes of CO2 per year as much as you would generate if you were going around the world 35x by car. And these measures are successful.

Despite our growth, we were able to reduce our own emissions since 2022 by almost 10%, that is by 9.6%. And beyond that, we take on responsibility in all dimensions of sustainability, also we take on social responsibility. You see some examples on the slides, and you find details in our sustainability report. With this, I'd like to pass the floor to our CFO, Raphael Widmer.

[Interpreted] Thank you, Markus. Ladies and gentlemen, I would also like to welcome you to this event. I will now lead you through the financial part of this presentation. And I will start with an overview. The order intake in 2025 continued its positive development. It was at CHF 6.1 billion and thus significantly exceeded our strategic target. The order backlog increased to CHF 32.3 billion compared to CHF 29.2 billion in the previous year. Revenue in 2025 was almost CHF 3.7 billion. So this was CHF 420 million more than in the previous year.

The negative impact of the natural disasters in 2024 could in part be compensated. As a result, EBIT is now at CHF 161 million, which corresponds to an EBIT margin of 4.4% and the EBIT margin is thus 1.3 percentage points higher than in the previous year. The net cash situation decreased by CHF 643 million to CHF 275 million. The reason for this was the major increase in production output and work in progress and the net working capital at the same time increased by CHF 589 million to minus CHF 422 million.

CapEx amounted to CHF 589 million and was thus higher than the previous year. The free cash flow was negative for the overall year, minus CHF 588 million. However, in the second half year, a positive free cash flow of CHF 155.9 million could be generated. The down payments of the past few years were used for order execution. And at the same time, we continue to invest in our plants. This brings me to the order intake. The order intake continued to show positive development at CHF 6.1 billion.

This is, again, a very good value, significantly exceeding the strategic target and slightly below the previous year's level. The main driver was the Rolling Stock segment CHF 4.4 billion, and this includes Cologne, the FLIRTs for NS in the Netherlands, or CITYLINK for Frankfurt. And in addition to that, we received many well-diversified small and medium-sized orders. The order intake in the Services business amounted to CHF 1.6 billion. The order intake in the Signaling business included CHF 103 million.

In the previous year's figure, the major order for MARTA in Atlanta was included with a value of $500 million. So these figures mentioned here only include third-party orders, no internal orders. Our geographically strongest markets are the German-speaking countries, Western Europe and the U.S. This brings me to the order backlog, which continues to increase and amounted to CHF 32.3 billion at the end of 2025 with a high Services and Components share of over 29%.

That gives us security for planning and stability for the future. Let me now talk about revenue. Revenue for the year 2025 increased by 15% without currency effects. If you take into account the negative FX effect of 2%, revenue increased by 13% to CHF 3.7 billion. Revenue in the Rolling Stock segment increased by 10% and here, 2% was the expense of FX effects. Services revenue increased by 19%, all that despite a negative currency effect of minus 2%.

In the Signaling segment, we had a 140% increase in revenue, and this increased a negative currency effect of minus 9%. And regarding revenue recognition, you also need to consider production output. Production output reflects revenue plus the gross change of work in progress. The production output in 2025 exceeded revenue by almost CHF 1.35 billion and reached over CHF 5 billion. So this accounted for an increase of over 21% compared with the previous year.

Let me now show you the production output in more detail. Stadler uses the conservative revenue recognition method units of delivery, meaning that Stadler only recognizes revenue after the vehicles have been accepted. This means that revenue reported lags behind actual production output. The conservative revenue recognition method combined with the long execution cycles in our business leads to the picture that you see here.

The order intake has since 2021 always been between CHF 5.6 billion and CHF 8.6 billion. They are always significantly higher than the revenue recognized in the same year. Revenue recognition follows several years later. And the production output, which you see in green on the slide, however, starts increasing much earlier, the vehicles get built and delivered to the customer after completion.

The years 2024 and '25 were years with a significant increase in production output and low revenues under the units of delivery method. If we use the cost-to-cost method, revenue for the year 2025 would be at over CHF 5 billion. And because of this situation and as we are now delivering lots of vehicles, we expect major revenue increases to over CHF 5 billion in 2026 and '27. And for the revenue planned for 2026 and '27, we already have 95% in our books.

And for the year 2028, we already have over 90% in our books. Now the EBIT. EBIT amounted to CHF 160.6 million, and this is CHF 60.1 million higher than the previous year. The EBIT margin was significantly improved and is in the target range of 4% to 5%. The negative effects of the flooding in 2024 could in part be compensated and the efficiency increase program in Germany is having an impact. The higher revenue also leads to better fixed cost coverage.

Now some remark on the consolidated result, which amounts to CHF 100.7 million, and it follows the EBIT. The currency effects in the financial results were positive. These are mainly valuation effects of balance sheet items at the reporting date. I will now come to the cash positions. The high down payments from the past are now being used for the production output.

The mix of work in progress is currently having a negative cash profile, and that has an impact on the operating cash flow on the net working capital and the net cash position. The merit image of the net cash position is the net working capital. So the net working capital was primarily influenced by the increase of work in progress. However, it remains negative, and negative net working capital is always desirable for us because that means that we have received enough cash from our customers to execute our projects.

And I would now like to show you another slide regarding the net working capital. I regularly show this slide because it nicely illustrates our business in the years 2016 and '17, we received major orders with substantial down payments that was Stadler's first big growth phase. In the years '18, '19, '20, we then had a phase where we had a lot of output, so where we used the money received to build and deliver vehicles.

And then in 2020, there was the COVID effect where we built vehicles, delivered vehicles or brought them to the customer sites, but we didn't get homologation, market authorization. Without market authorization, you can't hand over the vehicle, you can't get it accepted, then you can't invoice it, and you won't get money in and then the net working capital goes up.

As from 2021, there was a turning point, a catch-up effect after the pandemic. And then major orders came in again with respective down payments, and we also had good orders in execution with good milestone payments. So as a result, we had a net working capital of over CHF 1 billion in the negative, which was positive. And now comes another phase where we are seeing a major increase in production output.

I showed you this increase, CHF 1.3 billion, and this is not fully compensated by new down payments for new orders, which means that the net working capital shows a development in the other direction. But we do assume that it will remain negative. So we will also, in future, have enough down payments from customers to be able to use the money to execute on orders. So much on the cash position and the net working capital.

Now a few final words on capital investments, the investments made in the last few years mainly affect the expansion of capacities in Spain, Hungary, the U.S. and Germany. The high order intake required additional investments in our production sites and the investments in intangible assets that you see in light blue here mainly come from development activities for locomotives, alternative drive systems and Signaling technology. And with this, I close my presentation and pass the floor back to Markus Bernsteiner. Thank you very much.

[Interpreted] Thank you very much, Raphael, for these explanations. I would now like to give you an outlook to 2026 and beyond. In the long run, we will optimize our business in 4 action fields. Firstly, the team is the foundation for our success. We train more and more apprentices and thus counter the lack of skilled workers. We also expand internal development programs.

And I'm happy that we have such a great employee loyalty. We have many long-standing employees. Their major expertise is valuable, and we'd like to preserve it. We were able to continuously lower employee turnover over the past few years. The current turnover rate is 4.3%, which is an excellent value. Secondly, we drive ahead with innovation and digitalization on vehicles in the Signaling technology and in Services. We use new technologies to become more efficient and to improve our products.

This is the precondition to be successful in the market in the long run and to win orders. Thirdly, when it comes to order intake and revenue, we bank on a selective participation in tenders, meaning that we will evaluate in detail at what conditions we bid, and in which tenders we participate. And we further want to continue profitably expanding the Service and the Signaling segments. And fourthly, in the field of operations, we are focused on executing orders reliably, efficiently and on time.

And here, we bank on consistent cost and milestone control. We closely accompany our suppliers in order to make sure they deliver on time. We further invest in our production technologies, and we strengthen cooperation between our sites. And this brings me to the focus points for the year 2026. This year, we will focus on 3 topics: Stadler Germany digitalization as well as process and system harmonization. I have already talked about the situation in Germany.

We've reached the first goals, and we will continue to implement this efficiency increase program. When it comes to digitization, we can say that in early 2026, Stadler made a strategically important step ahead with the Stadler Digital Labs joint venture. The joint venture starts with about 100 employees. The subsidiary is focused on software engineering, safety systems, cybersecurity as well as digital solutions to support Stadler's global railway operations.

The further process and system harmonization within the Stadler Group also has a major importance. Stadler is organized in a decentralized way, and this won't change, and it offers us many advantages. At the same time, this leads to challenges for efficient cooperation. So in order to assure good and efficient cooperation, we harmonize our group-wide key processes, particularly in sales and in order execution. And one precondition for that is a uniform system and application landscape.

And for this, we introduce a modern PLM and ERP system for our business processes. With this, we create end-to-end processes in the entire group from sales to delivery. Both taken together increases transparency, reduces interfaces and strengthens group-wide cooperation. The system rollout has already started. Currently, the implementation is ongoing in the Swiss division. With these focus topics, we continue the pathway taken to improve our results. And this brings me to the financial outlook.

We confirm the existing short and medium-term guidance. In the financial year 2026 and in the next few years, we will reach revenue of significantly over CHF 5 billion, thanks to the high order backlog, the increased production output and the efficiency program launched in Germany, we expect an EBIT margin of over 5% for 2026. In a stable environment, we furthermore expect to be able to increase the EBIT margin to 6% to 8% in the medium term.

The order intake is expected to be in the range of 1 to 1.5x the annual revenue, which forms the basis for sustainable capacity utilization and further growth. Furthermore, for 2026, we expect investments of about CHF 250 million. And after 2026, the investments will still be at around CHF 200 million. The Board of Directors will propose to shareholders a dividend of CHF 50 million or CHF 0.50 per share for the year 2025. In the previous year, the payout amount was CHF 20 million or CHF 0.20.

Let me summarize now. We are proud that after the external adversities of the past few years, we have stabilized our business. The key figures point in the right direction. The measures taken have an impact, and we continue to put them into practice consistently. This shows that the hard work of the past few years is now paying off. The basis for Stadler's further success has been built. We will build on that and continue to go that way to further improve our results.

In addition to that, I can say that with our expansive and innovative product portfolio, we are very successful in the market. In the future-proof and growing railway market, we are excellently positioned. And I am particularly proud of our team. Every day, our employees do their very best to build the best railway vehicles and provide the best Services and Signaling solutions. We are all ready at any time to make a special effort and to find solutions for all challenges.

On behalf of the Board of Directors and the entire group management, I would like to thank all Stadler employees as well as all suppliers, business partners and investors for their commitment and their trust in us. We are convinced that with our strong team, our product innovations and the pathways chosen, we are very well positioned in order to continue our success story. We will continue to do so with determination, innovation and passion. Thank you very much.

[Interpreted] Thank you, Markus. We will now have a Q&A session starting here at the headquarters in Bussnang. There are 2 employees in the room with microphones. So please wait until you have the microphone. Who would like to ask the first question, the gentleman there?

[Interpreted] Thank you very much. Michael Foeth from Bank Vontobel. I've got 2 questions. The first one regarding investments, this CapEx of CHF 250 million for 2026 is higher than what you had announced last year for 2026 and 2025, it was also higher than initially planned.

Can you explain where the difference comes from and where exactly you made these additional investments? And the second question is whether the FX impact on the EBIT margin can be quantified and whether other effects had a negative impact on the margin or whether you can quantify other effects on margin in 2026 and beyond.

[Interpreted] Well, thank you very much for this question. The investments, yes, they are high, and we continue to expect high investments in 2026. There are 2 effects coming into play here for 2026 -- for 2025, sorry. There was some shifting from 2024 to 2025. And another major effect came from the plant in Hungary where an outstanding payment of a double-digit number didn't come in where the Hungarian state had promised subsidies and this payment will only come in 2026, but it had been expected for 2025, and this explains the differences in CapEx.

Regarding foreign currencies and the FX effect, yes, I can say that we have enormously stabilized the situation regarding currency losses. We have very well thought through hedging systems in Switzerland. This leads to slightly higher hedging costs, and this is reflected in the financial result. But on the other hand, this brings the advantage that we have reduced the volatility. So I cannot really quantify the currency losses, but I can say that they are in a range where they don't hurt us anymore.

This can clearly be said. But what is decisive is that we have now found a very stable solution for Switzerland. And looking into the future, well, you need to see that all these FX effects affect the Swiss units, which account for almost 50% of our volume. And here, a major part of the incoming payments are made not only in Swiss francs, but in foreign currencies.

So in the medium term, pressure might increase because we expect the Swiss franc to become probably even stronger compared with the other currencies, but this is in part compensated by the well thought through hedging concepts. This was about the EBIT, but where we are not protected is at the top line.

There, the -- we will have an impact on revenue if the Swiss franc gains in strength. But for me, this is not a key question because the point that we can also always the actual increase. This year, we had a 15% increase in revenue by -- without currency effects and with currency effects by 13%. Further questions?

[Interpreted] Simon Jetzinger from Rabobank. I also have 2 questions regarding the EBIT guidance, medium term, 6% to 8%. For 2026, you announced over 5% to be achieved, thanks to efficiency increases. And I'm now asking myself regarding the medium-term guidance, what drivers or what levers do you want to work to further increase EBIT? And another question is regarding the order backlog. What's the share of alternative drivetrains in your order backlog? And how you see the future development? So what growth you're seeing.

[Interpreted] I can answer this question. I mean, since the IPO -- I'm not teaching history here. But since the IPO, there were lots of external effects, COVID and then the war in Ukraine, we took extensive measures, which have an impact. You can see that in the 2025 figures. The environmental disaster in Valencia is still having an impact, but it is in part already priced into the figures, and this will be felt until 2027.

If you deduct all that, the EBIT margin would already now be at 6% to 8% as announced. And these are facts that we need to confront, and we did a good job here with our team and the key figures are going in the right direction. What are we doing? I already announced it in Berlin; we are restructuring the plant. We launched an efficiency program in 2025, and we -- this bears its fruit, and we have things well under control there.

That's nice to see. And then regarding investments, we are investing in a harmonization of systems and processes. We'd like to harmonize processes for the entire group. And we're investing in our PLM and ERP systems, which we'd like to marry with each other. And on the one hand, this requires capital investments. And on the other hand, a lot of work by our employees to streamline these processes.

[Interpreted] And these are 2 points that have an impact on the EBIT. And I would like to add that our Services business is increasing in volumes and margins, and this has a major impact. In the future, if the share increases, well, but with the share, you also always need to take into account the volume of the Rolling Stock revenue in the respective year.

And the other impact is the components business where we supply internally and then we have major orders like CBTC, Atlanta in the Signaling business, where we will see major revenue increases in the next 2 to 3 years, and these are business fields with above average margins. And then there was the question about alternative drives. I don't know whether you would like to answer that.

[Interpreted] Well, alternative drives. So we invested a lot in alternative drives, battery and hydrogen drives. We are the market leader in this field. No other manufacturer has delivered as many vehicles with alternative drives. So we have delivered the hydrogen train to the U.S. and have proven its worth and there we are well on track.

[Interpreted] We are not reporting these shares separately, but we had high orders from Germany. This is reflected in our order intake. We had orders from the U.S., also Austria, but we don't report that as a segment. So the figures are included in the relevant order intake.

But of course, it's a growing share.

[Interpreted] Then we've got a question here from awp, right?

[Interpreted] Johannes Brinkmann from News Agency, awp. I've got a question regarding the Minsk plant. What can you tell us about that?

[Interpreted] Well, Mr. Brinkmann, good question. So since the start of the Ukraine war, the Swiss government in coordination with the EU imposed the 18th sanction package, and we stick to this clear guidance 100%. So we have ramped everything down in Minsk to almost 0.

The employees have in part found other jobs, about 600 employees of these almost 2,000 employees were integrated into other Stadler plants. And so we are at almost 0 there. And we also decoupled all these operations from Stadler. Well, there is firewall between Stadler and Minsk. So of course, Yes. The plant is still owned by Stadler, yes, that's true.

[Interpreted] Yvonne Debrunner, Finanz und Wirtschaft.

[Interpreted] You mentioned the medium-term guidance of 6% to 8% EBIT. What is medium term for you in 2 to 3 years? What do we expect?

[Interpreted] Well, for 2026, we announced an EBIT of more than 5%. And medium term for me, these are 2 to 3 years. And in the long run, that would be everything above 5 years to give you a feeling for that.

[Interpreted] Then we've got another question here in front.

[Interpreted] Alexander Michel from Sudkurier in Constance, Germany. Well, in Stadler eyes, this was probably an unpleasant decision regarding the Zurich order. Can you update us here? Do you think you will again enter into competition with Siemens there? And second question, the Chinese competitors, they are now starting using unconventional financing measures by saying order now and pay later, you don't need to pay immediately. This is the new financing mode that the Chinese are using. Is this dumping mode worrying you or not?

[Interpreted] Well, regarding SBB. I mean I will not start from scratch again. I will not explain the background of the appeal. But all our employees worked hard to prepare this tender, and we were disappointed about the decision, and we wanted to understand what went not so well there on our side and there is the possibility to appeal against the decision if you don't understand the reasons. We have lodged this appeal with the Administrative Court in St. Gallen, they are now reviewing the case.

And unfortunately, I can't give you an answer yet because the proceedings are ongoing. That's the one point. And the second point, and that's very important to me, in St. Margrethen, we produce double decker trains and single deckers are built here in Bussnang. And we received orders from SBB. And here, we work well in concert with SBB. And I'd like to thank SBB for that. Cooperation is working very well, very professional cooperation. Thank you. It's a joy to work with SBB.

And the second question regarding China, well, we have nothing against competition. On the contrary, this inspires us, makes us innovate the engineers, they feel like attacked if there's competition and they like that. And the other point, however, is that we want to have a level playing field. It cannot be that a state subsidizes the railway industry. And we, as private operator have to pay from our own private coffers. We've got a problem with that. Competition, yes, of course, but at a level playing field.

Are there further questions?

[Interpreted] I've got 3 questions. Firstly, again, regarding the EBIT outlook and your margins, can you maybe quantify a little what the additional costs of margin are resulting from the flooding in Valencia and the impact on the supply chain? How much does it cost in 2026 and '27? The second question is about cash flow. Raphael, your comment was clear.

Net working capital should remain negative as a target. But from today's perspective, with the orders that we already have, will it go towards 0 again? Or are you at a level where it should more or less stay? And my third question is regarding Signaling with the third-party orders. What does the pipeline look like? Do we stand the chance of getting in bigger orders like Atlanta, any new big orders in the next 1 to 2 years?

[Interpreted] Thank you, Patrick. So coming back to the EBIT effect of the flooding events. This primarily affects the plant in Spain, and we've heard that about 60 suppliers and sub-suppliers were literally washed away. So the entire supply chain needs to be built up again and the actual effect in figures in the year 2026 that we will have to absorb is difficult to identify. I think the plant in Spain is not back to its old levels of performance because of the situation, and I do assume that the situation will normalize again in Spain in 2027 so that they will make it back to old levels.

Regarding the operating cash flow or the overall cash flow situation for 2026, I do assume we won't fare worse than in 2025, and that is clearly one of our goals to have a balanced out operating cash flow. And of course, the situation depends highly on the amount of down payments that we get from new orders that is difficult to predict, and it always depends on the individual reporting date. You can't always make projections. And then in the work in progress even if we do our work, it can happen that the customer pays 2, 3 weeks earlier or later. You always have this kind of deviation.

And the third point is everything also depends on the CapEx development, whether we manage to do our investments or can we may be do that in a smarter way so that we spend less money. This all has an impact on cash. And when commenting on cash, I always need to underline our long execution cycles, and I tried to show that with the net working capital curve showing you these swings. For me, it's decisive that we continue to operate with a negative net working capital.

So -- but I do assume we will remain negative regarding net working capital. And then you also asked a question about the Signaling business. You asked will similar orders like MARTA Atlanta come in? Yes. There are such orders on the horizon. And in 2025, we got orders from SOB for interlocking systems. And in the U.S., there will also be orders coming in and also in other markets.

[Interpreted] Further questions here, [indiscernible].

[Interpreted] A question about the Copenhagen project. How the project is going to be divided between Siemens and Stadler, who is going to be responsible for what and what is the financial part of the project between Stadler and Siemens.

[Interpreted] So that is a question about Copenhagen Commuter Railway, a cooperation between Siemens and Stadler. And the question is, how do you split the work and what financial impact does that have? Well, the joint venture or the cooperation there exists between Siemens and Stadler. Siemens is in the lead, and we supply bogeys and Siemens supplies the drive system. So everything that has to do with power converter and so on is Siemens' part, and we deliver the bogeys, the frame and the interior fitting.

This is more or less the split. And we are now ramping up everything and refining everything. And by the way, this is a very nice order, and we are happy that we can cooperate here. So you also see we are not only competitors like at S-Bahn, Zurich, we also work professionally in partnerships that's clear to us. Well, this automation is provided by Siemens.

[Interpreted] Maybe one more remark from people here in Bussnang. [indiscernible] from UBS.

[Interpreted] I've got 3 questions, if I may. On the one hand, your order intake and the low-down payments. I do assume that this has to do with the higher Services share but were there also changes in the Rolling Stock segment that customers made fewer down payments fewer than in the previous years. And then you have CHF 300 million that need to be repaid from a bond this year.

Do you want to fully or partially refinance that bond? And you now have rather low cash positions or at least compared to the previous years. I do assume that this depends on the relevant reporting date, but can you explain what more can be said there?

[Interpreted] Well, regarding order intake and down payment behavior, we see no change in the down payment behavior of our customers. And this holds true both for new orders and for Rolling Stock and for Signaling. So what is the size of the mix of orders in execution at the individual reporting date. And here, I'd like to repeat myself.

These are extremely long cycles, high payments, difficult to predict. There can be shifting of dates, and then this can easily have an impact of CHF 100 million to CHF 200 million. So no change there. Regarding the bond, yes, that is right. In November, we have the bond repayment date, and we're currently evaluating how to deal with that. And what to do. So currently, it is not clear yet.

And I think the entire cash situation for me didn't come as a surprise. So it is our purpose to build railway vehicles and to execute orders. And if I have CHF 1 billion or more in down payments, we need to use them. If we still had the cash available, we'd have another problem because that would mean we hadn't executed our orders. So this is all part of our business. And I tried to show you these enormous swings, these curves, and they are not worrying me.

[Interpreted] Thank you very much. Now the questions from the telephone stream. We will start with the German questions, who would like to have the floor? We currently have no questions from the German channel. We will take a question from the English channel, Akash Gupta from JPMorgan.

I have 3 questions, and I'll ask one at a time. The first one is on impact of war in the Middle East. I think you had around 2.5 weeks to digest what is going on. So maybe if you can talk about how do you see the impact -- potential impact on your cost base and supply chain, particularly those industries which are more energy intensive. So that's the first one to start with.

[Interpreted] Well, that was a question regarding the situation in the Middle East and the impact on the cost side and the supply chain.

[Interpreted] We are closely observing the situation. At the moment, we see no negative impact, but I mean, it's as every war at some point, they will have an impact. But for the time being, we don't see anything. Also regarding the supply chains, no impact for the time being.

[Interpreted] Your second question, go ahead, please.

Yes. The second one is on operating leverage. So in second half of 2025, you delivered CHF 2.2 billion sales and had 5.4% margin. When we look at for 2026, you are guiding more than CHF 5 billion in revenues. which is more than double of second half revenues last year. But when we look at your guidance, your guidance is kind of implying no operating leverage. I know there can be several moving parts, but wondering if you can provide what is stopping operating leverage in 2026 compared to second half of 2025.

[Interpreted] Well, if you compare the revenue figures of the second half year 2025 and compare that with the guidance for 2026, will we be able to meet the guidance? That's the question.

[Interpreted] The situation is as follows.

I go in English. I mean the question you had is actually the second half of the year, you said the operating leverage was not visible. And why is that? So is that your point?

My point is when we look at your '26 guidance with '25 and especially second half of '25 and given that your revenues are more than doubling compared to second half of '25, but margins are more or less similar, given you delivered 5.4% and now you're guiding more than 5%.

So I'm like -- it doesn't sound like we have operating leverage in the business. So is there anything on the mix side or any other thing, maybe on currency that might be a headwind why margins are not going meaningfully above 5.4% you delivered in second half of 2025?

They are still -- I mean, still the situation in Spain, actually, where we still have to have these negative impacts and also in Germany. That basically also had an influence in 2025 and we have one in 2026. And the operating leverage, you actually see only or predominantly on the SG&A level.

And my last one is on Rolling Stock backlog margin. I mean you have seen increase in your Rolling Stock backlog from CHF 22.4 billion from CHF 20.9 billion a year ago. Can you give us some color on how backlog margins are changing? And when we look at your margins in new projects, how does those compare with your margins in your backlog?

So the question is how about the Rolling Stock margin regarding the order backlog or comparing new with old orders?

[Interpreted] We do not separately report these margins. But what can be said is that we tend to generate better margins on new orders than in the past. In our order backlog, we continue to have some orders from the past where the margins are not so great and you should not underestimate the situation in Spain, where some projects suffered because of the natural disaster, and we saw similar effects in Germany. And once these orders have been delivered, we will definitely also see an improvement of margins.

[Interpreted] Are there further questions from the phone?

We've got another question from the English channel, Vivek Midha from Citi.

My first question is a follow-up regarding the margins. Do you have any updated view on when you might be able to get to that midterm margin target? In particular, you commented that you think that Spain should be back to normal by 2027. Should we take that as meaning that we should be back into that 6% to 8% margin band by next year?

[Interpreted] So the question is, can you give us an update on the margin, the medium-term outlook? And if you say that the negative effect of Spain would be -- in Spain would be over in 2027, whether you can then expect medium-term margin improvement.

[Interpreted] Well, the Spain effect, we do assume it will continue until 2027. And how quickly everything will then be balanced out can only be seen in the course of the year. And this is why we said in the medium run, 6% to 8%. So I cannot guarantee that we can get on track that quickly, but we do assume there will be margin improvement.

[Interpreted] Your second question please?

My next question is just following up on the order intake. You've given us the book-to-bill range for 2026. Based on your pipeline, the delays in order intake from 2025, where would you say your central case is around where you land in that book-to-bill range?

[Interpreted] So I think that it's a question regarding the order intake 2025 and the book-to-bill ratio, right?

I'm not sure I got the question correctly. Is it with regards to the volumes?

Yes.

Okay. No, I mean...

Yes, essentially, where do we land within the 1 to 1.5x most likely in '26.

We expect 1 to 1.5 as guidance for orders received, 1 to 1.5x revenues.

Okay. So any view on where most likely you land on that? Is it the high end more likely than the low end? How are you thinking about that?

It's really -- let's say. You also know how bulky our orders are. So that's why I would stick with the 1 to 1.5x.

Okay. That's clear. My final question is just regarding your comments on restructuring in Berlin. I understand, of course, a lot of this is actually around processes and so on. But just to check, have you embedded any cost for restructuring and severance within that guidance on the EBIT margin?

It's not a restructuring. It's an efficiency program. So then those answers and the question, there's no, how to say, provision and so on for whatever severances and so on included. It's an efficiency program.

[Interpreted] Okay. Are there further questions from the telephone channel? Otherwise, we can come to the written questions.

[Interpreted] Yes, there's another question on the English channel. William Mackie from Kepler Cheuvreux.

My first is a couple of details on orders. Very impressive booking with NEXRAIL for locomotives. But how much of the 200 framework that you talk about was booked within the '25 account? And when will that subsequent order drop through? And again, specifically on Berlin, you called out potential for 1,500 railcar order coming through to follow on around the framework you have there.

Just an idea of the sort of quantum of that order. So that's the first question. The second was on your Slide 20 relating to production output, 21% in 2025. Can you give us -- I know you've given a lot with regard to guidance, but can you give us a sense of where you see production output developing in '26 in comparison to revenues? Are we going to see another delta where gross work in progress expands and we see higher production output compared to the revenue guide that you're talking about for 2026?

And the last question is going back to the commentary around net working capital and to ask the question perhaps again. But when you think about your central case scenario around the framework for '26, to what extent will net working capital be a drag or negative within the commentary that you're giving around cash flow?

[Interpreted] So I will quickly summarize your 3 questions. First question was about the NEXRAIL order from Luxembourg, these 200 locomotives. How much of that is already priced in? Then second question, Berlin, the expected order of 1,500 cars, how realistic is that?

[Interpreted] Let's maybe the first question. Well, these 200 locomotives, that's a framework agreement. And I must admit, I don't know exactly how much has already been booked for 2026. So there's always a framework agreement with the first fixed call up and the rest will then come later. Do you know it? I don't know what the exact number is.

[Interpreted] We won the framework agreement. Currently, none of these 200 vehicles is currently in the order book. And the second question, BVG in Berlin order and the scope of a framework agreement, these 1,500, 484 are currently in production. And for the rest, we're still waiting. So nothing is currently in our capacity planning for that. So maybe this is important to understand.

If we win a framework agreement, we nevertheless only book this order into our books once we have signed the actual agreement for the call of the framework agreement. That's only the framework. And if they then need a certain number of vehicles, then they make a call off and this needs to be signed in the scope of the contract and we communicate that. So this is only for your understanding.

[Interpreted] And the second question regarding the production output, what development do you expect in 2026? And what will be the impact on the profit?

[Interpreted] Well, regarding production output, we do assume that it will increase again after 2025. And -- I mean, revenue will continue to increase, will significantly exceed CHF 5 billion. And this to happen is a precondition to go up to new dimensions. And this then will have an impact on net working capital and cash because building these vehicles ties up capital.

And I don't know this answers your question, whether you got it. I mean we're building up production output again in 2026 compared to 2025. And this again has then an impact also on the net working capital. And all -- I mean the second question or the third you had was about net working capital and development, what would be my mid-expected range. I would say with all what I have said now, I would expect like a stable outlook for the net working capital, the remaining negative.

Okay. One last question regarding the guidance to revenue. At the CMD, you talked about a midterm revenue potential of CHF 5.5 billion. With these results today, you talk about above CHF 5 billion. So can you frame why there was a change in the terminology? And do you still see the potential to exceed CHF 5.5 billion of revenue from the execution of the current order backlog?

We expect CHF 5.5 billion. That's also the guidance. We had CHF 5.5 billion in the midterm.

[Interpreted] Before we come to further telephone questions, I'd like to ask [ Miriam Koch ] what written questions have come in.

Well, we have one more question by Lucas [indiscernible]. He asks to what extent did you price in the price increases for steel and electronics and other matters.

[Interpreted] Well, all price increases that we know about so far are included in this 5% in this guidance.

[Interpreted] Then that's from the written questions. And of course, you will still have the opportunity to ask individual questions in interviews. We will right now start a guided tour through the Stadler plant here in Bussnang. If you'd like to participate, it takes about half an hour. So if you'd like to go on the guided tour, follow [indiscernible] and Heinz Hofer. So you will be split into 2 groups.

But what is important, please stay within your group and keep away from electronic parts or parts with edges. You can take pictures at 4 photo spots and there you can take photographs, make videos. For all journalists who would like to have an individual interview, please report to us. You can then after the interview also still get a guided tour.

And as from 12:00, we will all invite you to lunch. Raphael Widmer and Markus Bernsteiner will also be at lunch with you. I'd like to thank you for your interest in Stadler. If you would like to get even more background information, this is the latest annual report printed last night, and you get it at the exit. Thank you very much for your interest, and goodbye.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Dear sirs and madams, member of the press and analysts, warmly welcome you to today's press conference on Stadler Rail's Half Year Results 2025. On behalf of Stadler, I would like to welcome Group CEO, Markus Bernsteiner; and Group CFO, Raphael Widmer. They both will present the half year results to you. You can also follow the presentation via the web stream. Afterwards, the Group CEO and CFO will, of course, be available to answer your questions.

My name is Marc Meschenmoser, Head of Group Communications. I'm looking forward to guiding you through this event.

[Foreign Language]

I will now pass the floor to Stadler Group CEO, Markus Bernsteiner.

[Interpreted] Thank you very much, Marc. Dear media representatives, analysts, I would also like to give you a warm welcome to the presentation of Stadler's half year results.

Before presenting our key figures, I would like to show you where we are coming from. As you will know, in the financial year 2024, we were hit hard by devastating natural disasters in the [ count ] of Valais, in Lower Austria and in Valencia. These pictures were quite striking, and the flooding events had major effects on production and supply chains. We immediately took measures in order to mitigate the consequences, and these measures are effective. We have in part been able to catch up, and mainly, the event in Valencia, however, still has a negative impact on the financial result.

The negotiations with the insurance companies are still ongoing. Furthermore, the weak economic development in Germany continued to have a negative impact on our business. In order to secure the competitiveness and the production sites of Stadler Germany in the long run, Stadler is putting into practice an extensive structural and efficiency increase program. Also here, we've achieved the first results in April, a future orientated collective bargaining agreement for the Pankow factory was signed with the trade unions. This contract guarantees operations until the end of 2031 and guarantees employment until at least the end of 2029. In return, the employees make a contribution and work 40 instead of 38 hours per week.

Furthermore, we implement measures to increase the operating performance over the entire value chain, reduce lead times in production, simplify processes and reduce costs because we want to give Stadler a long-term, economically stable foundation.

Also in global politics, a lot happened over the past few months. On the 5th of August, U.S. President Trump imposed 39% import tariffs on Switzerland. Stadler is not extensively affected by this because we've been running our own factory in Salt Lake City since 2016, with which we meet the requirements of the Buy America Act, which says that in orders with public funding, at least 70% of the value creation must be generated in the U.S. Currently, we have local value creation of 70% to 80%. Of the remaining 20% to 30%, the major part comes from the EU, where we have customs tariffs of 15%.

Furthermore, Stadler has included contract provisions protecting the company against part of the extra costs incurred. As we saw major growth in the North American market, we decided back in 2023 to double capacity of the Salt Lake City planned and to build a [ car body ] production there. The first welding [ theme ] was applied at the beginning of the week there. And this can again lead to an increase in our value creation in the U.S., which leads to lower tariffs.

This brings me to the key figures for the first half year 2025. As you can see, we were able to stabilize the business in a challenging environment. Important key figures have improved, which shows that the measures taken have had a positive effect. In the first half year 2025, we were able to increase our revenue by over CHF 100 million to CHF 1.4 billion year-on-year. The production output is almost CHF 1 billion higher than the half year revenue, thanks to our conservative revenue recognition approach, and the revenue will increase strongly in the next few years.

The group result is 12% higher than in the previous year's period. It is now at CHF 30.9 million. We were able to increase our EBIT margin by 0.4 percentage points to 2.6%. The gross margin is at 11.6%, which is comparable to the previous year's period. Stadler has furthermore been very successful in the market. We won orders in the magnitude of CHF 1.7 billion and have just been able to increase our order backlog by another CHF 200 million to CHF 29.4 billion. This shows that with our broad and innovative product portfolio, we are very well positioned. The free cash flow, the net working capital and the net cash position values will be explained by Raphael Widmer later on.

What I'd like to underline is that we are a globally attractive employer, that we have created lots of highly qualified jobs. In these past 6 months, we created about 1,600 jobs. Thanks to the good order book situation, the number of employees has thus increased to almost 16,600. In Switzerland alone, we have 5,600 employees.

This brings me to the segment overview, an overview of our 3 reporting segments. With a 72% share of the order backlog, the Rolling Stock segment continues to be the biggest segment. We stand for innovative and durable quality products and have the widest product range in the industry. When it comes to alternative drive systems with battery and hydrogen trains, we are the global leader.

No other manufacturer sells more environmentally friendly trains with alternative drive systems than Stadler. In passenger trains, we have a strong #2 in Europe.

The Service & Components systems have grown strongly over the past few years and contributes almost 26% to our total order backlog. The Signalling segment is also growing strongly, which is strategically very relevant. We are now independent from our direct competitors as supplier. And we can offer our customers tailor-made solutions in all signaling areas.

I would now like to give you some further insights into our 3 segments. In the Rolling Stock segment, we've been able to increase our revenue by 9% to CHF 1.1 billion. In the first half year, we sold 133 vehicles, with auctions for another 61 vehicles. The order intake amounted to CHF 1.4 billion. The order backlog of this segment is CHF 21 billion.

Of the orders won, I would like to present three here. In March, Austria's WESTbahn ordered 3 SMILE high-speed trains for the Vienna-Graz-Klagenfurt-Villach section. After a record production time, the trains will already be running as from March 2026. In May, we received the prestigious order to supply and maintain 7 FLIRT trains for operations between the Swedish Airport of Arlanda and the Stockholm main station. In the tailor-made business, we were able to sign a contract for 8 rack railways for this spectacular trip up to the [ Roche ] at Lake Geneva.

As I have mentioned, we are the technology and market leader in the field of alternative drives. We are able to constantly strengthen this position. In Europe alone, 50% of all alternative drive trains come from Stadler. Until mid-year, we had sold more than 300 battery or hydrogen trains, with an option for another 204 vehicles. Many of these trains are already running successfully on a daily basis.

Also in the first 6 months 2025, where we're able to win additional orders. DB Regio ordered 19 battery electric FLIRT Akku trains for the Central Thuringia battery network. And for [ France ] we should soon be able to build 8 hybrid meter gauge trains. These environmentally friendly vehicles replace existing diesel vehicles. And thanks to Stadler technology, the CO2 emissions are thus massively reduced by up to 77%. We will continue to focus a lot on alternative drives and press ahead with that with a lot of innovative power.

And this brings me to the Services & Components segment. Apart from the maintenance contracts with Arlanda Express that I already mentioned, we won orders in the Czech Republic, Poland and Switzerland. Also in the Services & Components segment, are we able to report solid revenue growth of 17%. Revenue has increased to CHF 270.7 million. The order intake in the first half year 2025 reached a total of CHF 263.8 million. The order backlog in the services business has thus increased to CHF 7.8 billion.

And this brings me to the Signalling segment. The division Signalling mainly supplies other Stadler divisions, and we only report revenue generated with third parties. Compared with the first half year 2024, we were able to strongly increase the order intake by 57%. Revenue was at CHF 21.9 million. Also in the Signalling segment, where we're able to reach some strategic milestones with our infrastructure components, we managed to enter the French market.

And we also received an order from the Chemins de fer du Jura. They mandated us with the installation of next-generation interlocking stations at the Tavannes and Orange train stations. Furthermore, we are delivering train protection equipment for the expansion of the Tram network in [ Behegen ].

With this short review, I'd like to pass the floor to our CFO, Raphael Widmer.

[Interpreted] Thank you, Markus. Ladies and gentlemen, I would also like to welcome you to today's conference call. I will now lead you through the financials. Let me start with an overview. The order intake in the first half year was CHF 1.7 billion, and thus lower than last year, but we expect additional bigger orders for the second half year, and we do assume that we can reach our communicated strategic target for the financial year 2025.

The order backlog is CHF 29.4 billion and has slightly increased since the end of last year. The revenue increased to over CHF 1.4 billion, which is a record for the first half year of [ a year ]. The EBIT was CHF 37 million, which corresponds to a margin of 2.6%, and that is 0.4 percentage points more than in the same period of the previous year. The net cash went down by CHF 775 million to minus CHF 407 million. At the same time, the net working capital went down CHF 720 million to minus CHF 291 million. This is related to the strongly increased production output, resulting in more work in progress. CapEx increased to CHF 120 million. The free cash flow is minus CHF 744 million. And for the second half year 2025, we expect a balanced out free cash flow.

Let me now come to the order intake. At CHF 1.714 billion in the first half year, the order intake was lower year-on-year. It is difficult to plan ahead regarding the order intakes, but -- and order volumes can be very big, but we confirm the outlook for the full year. The order intake for Rolling Stock was CHF 1.4 billion; for Services, CHF 264 million; and for Signalling, CHF 52 million.

The strongest markets, geographically speaking, are the German-speaking countries and Western Europe. Let me now come to the order backlog. At the end of the first half year, the order backlog was CHF 29.4 billion, with a high Services & Components share of more than 26%, which gives us good revenue visibility and stability for the future. The strong order intake will lead to further investments.

Let me now talk about revenue. Revenue in the first half year 2025 increased year-on-year by 8.4% to CHF 1.402 billion, including negative FX effects of 1%. Revenue in Rolling Stock increased by 8.9%. The negative currency effect was almost 1%. Revenue in the Services & Components business increased by 16.8% despite a negative FX effect of 1.1%. The revenue in the Signalling business was down 48% with a negative FX effect of minus 1.1%. And here, we expect to catch up significantly in the second half year.

And this also explains our production outlook. The production output is revenue added to the gross volume of work in progress. The production output in the first half year 2025 exceeds revenue by CHF 930 million and reached CHF 2.332 billion, which corresponds to an increase of over 18% year-on-year. So we had massively higher output than the revenue because of the conservative revenue recognition method.

Stadler mainly uses the units of delivery approach in the scope of the POC method, meaning that vehicles only get recognized as vehicles once completed and accepted by the client. This means that between signing a contract and the generation of revenue and earnings, many years can pass, so revenue and margin are significantly lagging behind the operating output. This method is a conservative one and leads to a later recognition of revenue and profit compared to our competitors.

Let me now talk about production output versus revenue. This conservative unit of delivery method, in combination with the long execution cycles, leads to the following pictures. Since the year 2021, we've had annual order intake of CHF 5.6 billion to CHF 8.6 billion. And this is always significantly higher than the revenue generated in the same year. So there's always a lag of several years between order and revenue.

The production output, defined as annual revenue plus gross volume of change in work in progress, that starts much earlier to show an increase. So vehicles are built, and after production, they are delivered to the customer. And in the year 2024, we had a year with a strongly increasing production output and low revenue according to units of delivery. So if you use the cost-to-cost method, revenue for the year 2024 would be CHF 4.2 billion.

The same holds true for the first half year 2024. According to cost-to-cost, our revenue would be CHF 2.3 billion.

Because of this situation, we expect a significant increase in revenue in the years 2026 and '27. In the year 2025, we expect revenue to increase compared to 2024 by significantly over 10%, and in 2026, an increase to significantly over CHF 5 billion. And for the planned revenue of the year 2026, we already have 95% in our order books for 2027, it's already at over 80%.

Now our EBIT. The EBIT amounted to CHF 36.9 million. The margin increased to 2.6%. However, it continues to be negatively influenced by the negative weather events in the year 2024. The EBIT margin for the first 6 months is never very telling because of our conservative revenue recognition method and the mix of orders. As we usually deliver more vehicles in the second half year, we also recognize higher revenue in the second half year. It's usually 1/3 delivered in the first half and 2/3 of the revenue recognized in the second semester.

And now a short comment on the net income. The group result amounts to CHF 30.9 million. The tax burden is higher. The FX effects in the financial results were positive.

I would now like to talk about the cash situation. Let me start with the net cash position. The decrease of the net cash position was mainly due to the fact that in the years 2023 and '24, high downpayments for orders were recognized, which are now being used for producing the product. So we invest the downpayments in vehicle production, which, technically speaking, has a negative impact on the net cash position.

And here, I'd like to refer back to my comments regarding the production output. Together with the investments of CHF 120 million, this leads to a strong reduction of the net cash. And furthermore, we also pay out a dividend in the first half year. The merit image of the net cash position is the net working capital. The net working capital has strongly increased because of an increase in work in progress. However, it remains negative.

Negative net working capital is a positive thing because it means that our orders in general can be financed by downpayments, not by banks. In the second half year, I expect the net working capital to decrease again, which would be positive.

Now a few words on the long-term net working capital evolution. In the years 2016 and '17, Stadler received orders of high downpayments, combined with milestone payments from ongoing orders that led to a strongly negative net working capital. In the years 2018 to 2020, the downpayments were used up to produce the vehicles. And in addition, the COVID period made it impossible for customers to take over vehicles, and the result was a significantly positive net working capital.

As from 2021, the situation turned around again. The negative COVID effects were caught up. And furthermore, we received good downpayments from new projects. And we also received milestone payments from ongoing orders, and the net working capital turned strongly negative again. In the long run, we expect a slightly negative net working capital with fluctuations over the cycle. So we have very long cycles, which is not very -- which is why it's not very telling to look at just 1 year.

Now a few words on capital investments. We have mainly invested in the expansion of capacity in Spain, Hungary and the U.S. The high order intake leads to additional investments in our factories so that the capital investments in the year 2025 will remain at a high level at CHF 250 million approximately. And the investments in intangible assets mainly come from development activities for locomotives, alternative drives and signaling systems.

I would now like to pass the floor back to our CEO, Markus Bernsteiner.

Thank you very much, Raphael, for your explanations. As we have heard, we have again been very successful in the market and were able to further increase our order backlog. This was thanks to our strong, committed and passionate team. And on the other hand, also thanks to our high investments in our innovative and very broad product portfolio. For the different market segments and geographies, we offer fitting products and solutions, and we are well positioned in the market.

This in a very attractive and future-proof industry, as market development shows. The Rolling Stock market has a volume of EUR 60 billion. If you deduct freight wagons from that because they do not have strategic importance for us. then the interesting market volume for us is EUR 44 billion.

On the right-hand side of the slide, you see the volume of the strategically relevant markets for us as China is the factor closed market, we need to deduct the Chinese market. And the relevant market volume is plus EUR 32 billion. This market has a forecast annual growth of 5.8%, which is a lot. Thanks to this promising situation, our focus is on the efficient and perfect execution of our orders. For this reason, we have for years been investing a lot in our factories and production technologies. The latest example is St. Margrethen in Switzerland.

The factory has a high capacity utilization, but we want to be prepared should demand continue to increase. For this reason, we have taken the respective steps, and 2 weeks ago, applied for building permit for plant expansion. We intend to expand the factory surface by around 50%. We would just create several hundred new jobs. Whether we will actually expand the factory will strongly depend on the future order situation in Switzerland.

As I've already mentioned, we are also expanding our Salt Lake City plant. At the end of the year, our new assembly hall will go into operation. And the factories in Spain, Poland and Hungary have also extended their capacities.

We further optimize our business along 4 mid- to long-term fields of action. Firstly, the team is the foundation. With our talent program, we are countering the lack of professionals. The successful management and leadership and development programs will continue to be expanded. Secondly, we drive ahead with innovation and digitalization in vehicles and signaling technology. We use new technologies to become more efficient and to improve our products. This is the precondition in order to be successful in the market in the long run and to continue to win orders.

Thirdly, when it comes to revenue and order intake, we focus on a selective participation in tenders, meaning that we thoroughly consider under what conditions we submit a bid. We furthermore want to profitably expand our Services and Signalling business. And fourthly, in operations, we focus on an efficient execution of orders and a reliable delivery on time. For this, we bank on consistent cost and milestone control. We accompany our suppliers closely in order to make sure they deliver on time and that we can deliver on time. We furthermore invest in our production technologies and reinforce the factory network.

Stadler is organized in a decentralized way, and we will continue to have such a decentralized organizational structure as it offers lots of advantages. At the same time, efficient cooperation within our global structure is of key importance. This is the key to increase group-wide productivity and at the same time, reinforce our ability to adjust and innovate. This is why we have a clearly defined plan for the further interconnection of our sites. A key element here is the introduction of '26 guidelines which are the basis for binding standards. Based on that, we are currently harmonizing our group-wide key processes, particularly in sales and order execution.

This harmonization is the precondition for the gradual introduction of a uniform system and application landscape, meaning that we are strongly reducing the number of IT systems used. For certain work, we, in the future, want to use the same system group-wide, which is currently not always the case. The rollout has already started. We are currently implementing new systems in the Swiss division.

As you can see on the right-hand side, we furthermore make targeted investments in our production technologies. With the digital checks, we take pictures of car body components and use computer algorithms to check them for quality defects. We also digitalize our plants. New technologies make it possible to make the production progress visible in real time. With this and other measures, we increase the quality, efficiency and sustainability of our production and thus make a future-oriented production possible.

This brings me to the outlook. I am going to present to you now, the expected development of the key financials. Because of our strong market position, Stadler confirms the communicated outflow -- or the outlook communicated when the annual figures for 2024 were presented in mid-March 2025. So thanks to the strong order backlog and a good position in the market, we expect a significant increase in production output in the next few years.

In the midterm, we expect the book-to-bill ratio to be on average between 1 and 1.5. The book-to-bill ratio describes the ratio between new order intake to previous year's revenue.

Furthermore, for 2025, we expect an increase of the net profit of significantly over 10% compared with 2024. In order to handle the increase in production output, Stadler invests in the ongoing business year, around CHF 250 million in production capacities. And in the next 2 years, it will be around CHF 200 million each. Furthermore, Stadler expect solid downpayments from new orders and improved payment conditions for the ongoing orders.

Assuming stable supply chains and a successful effect of the measures taken, Stadler expects revenue to increase and also EBIT -- the EBIT margin to increase to between 4% and 5% in the year 2025. The financial year 2026 will show a significant revenue increase to significantly more than CHF 5 billion. Stadler continue to be convinced that under constant global framework conditions, an increase of the EBIT margin to 6% to 8% remains realistic in the mid- to long term. And the dividend policy, with a payout share of around 60% of the group result, this dividend policy is confirmed.

This brings me to the end of my presentation. We are proud that after the externally caused adversities last year, we've been able to quickly stabilize our business. The size of key figures show a positive development and the measures taken have an effect, and we will continue to consistently put these measures into practice. With our wide and innovative product portfolio, we are very successful in the market. So we are well positioned in a future-proof and growing rolling stock market.

Furthermore, in the field of alternative drives, we've again been successful and have thus further reinforced our market and technology leadership. I am particularly proud of our strong team. Our employees do their best every day in order to build the best rolling stock in the world. We always find a solution for challenges, and we are all ready to make a special effort any time. On behalf of the Board of Directors and the entire group management, I would like to thank all Stadler employees as well as all suppliers and business partners for their commitment and their trust.

We are convinced that with our strong team, our product innovation and the measures taken, we are very well positioned in order to continue to be successful. Thank you very much.

[Interpreted] Thank you, Markus. We will now have a Q&A session. We will start with the oral questions in German and then have the written questions in German. Who can I pass the floor to? We have one question by [ Johannes Brinkmann ] from [ ABP ].

[Interpreted] So last year, because of the adverse weather events, you had to postpone CHF 300 million in revenue to the following years. How much of this have you caught up?

[Interpreted] Well, as I have explained, we were hit hard by the disaster in Valencia. In particular, CHF 350 million had to be postponed and [ 200 million production hours ]. And this effect continues and will continue into 2026. As you have also heard, the production output was increased by CHF 1 billion. The exact figures of how much will be shifted into the year 2026 is something that I cannot tell you right now. However, with the measures taken and the action plan, we are well on track.

[Interpreted] Well, but just an order of magnitude, is it 1/3 that you're shifting into 2026 or less?

[Interpreted] And Raphael, it may say, well, as I told you, the catch-up program is ongoing. Identifying the individual effect is difficult, but it is a fact that we are well on track with the revenue of this year. We also said that the effects will have been compensated by 2026-'27, but you can't really split that by year.

[Interpreted] May I ask you how much you lost because of the adverse weather events?

[Interpreted] Can you repeat the question?

[Interpreted] I didn't really understand how much EBIT did you lose as a result of the adverse weather events, the loss of EBIT this year -- in this first half year.

[Interpreted] And Raphael Widmer says, I've got the same answer here. This is all related to revenue recognition. And what is important for us is that all the measures taken have been considered in our financial planning, and we are well on track. So these effects were taken into account in our financial planning. The effects have been communicated, and we are now executing our orders.

[Interpreted] Thank you very much, Raphael. Another question by [indiscernible].

[Interpreted] I've got 3 questions. Firstly, that regards to your order pipeline, another 4 months to go. And I would like to know whether from today's point of view, you see order intake at 1.0x or 1.5x book-to-bill in order to give us an order of magnitude of the dynamics there? And the second question is, at the end of the presentation, you said you expect better payment conditions for ongoing orders. Can you explain that? How you [indiscernible] that? And the third question is whether you can quickly explain the strong increase of the profit to minority shareholders.

[Interpreted] Markus Bernsteiner says let me answer the first question. It goes rather in the direction of 1.5. And the second question, that has to do with the payment conditions for ongoing orders. So I can say that the downpayments that we are getting, that always depends on the order mix that we are executing. So there are no changes in payment patterns. But I can confirm that the payment plans, that we do not see any changes there. And regarding question 3 with the minority share, here, we had a major currency effect on a minority stake in an investment.

[Interpreted] Thank you very much, Raphael. This brings me to a question by Patrick Rafaisz, UBS.

[Interpreted] I've also got 3 questions. The first question is regarding the net working capital. Raphael, if I understood correctly, we will end this year with a positive net working capital, which is a big step towards your midterm target. Does that mean that as from 2026, with the planned production output, you will release capital again? Or will it continue to increase? That's my first question.

The second question is regarding the expansion of the St. Margrethen factory. This potential expansion, is that already included in your CHF 200 million CapEx guidance? Or would that come on top? And what exactly does the expansion depend on? Are you referring to specific tenders here? And the third question, that's a detail regarding the financial result. The positive FX effect, can you quantify that? And how much was the interest cost here?

[Interpreted] Let me start with question 1. The net working capital will remain negative. It will not be positive. And that is a good thing. And for us, it is important that we can always make use of the downpayments from our customers to produce our products. And the output for 2025-'26, the production output will remain high. However, in the subsequent years, production output and revenue will be more and more equalized because this is now happening. And the net working capital will as a result, despite everything, remain negative.

[Interpreted] Markus Bernsteiner. Patrick, I would like to answer the additional question regarding the expansion of the St. Margrethen factory. So if we could press a button now and the excavators would start working now, we have a building time of 2, 2.5 years. So yes, we have budgeted the capital expenditure for the years 2026, 2027, maybe a little in 2028. So this is included in the planning. But of course, if we in Switzerland receive orders and produce them here, then we will be able to expand the factory.

[Interpreted] And one more question regarding the financial results. I mentioned this minority stake already where we suffered a major FX effect. It was a positive FX effect, but it's not the only FX effect. And it gave us some tailwind. On the other hand, you also need to say that the tax burden was higher than in the previous year.

[Interpreted] Then we will answer the written questions. We have a question from the [indiscernible], who asks, what do you say about the fact that the [indiscernible] lease new trains or the lease trains from [indiscernible].

[Interpreted] Well, they are one of our biggest customers. We are in constant contact with [ SPB ] and would be very interested in such orders. However, what we as Stadler Rail cannot do is lease out company. So this leaves out the trains. So the specifications that would be directly negotiated with [ SPB ] and the payment of the rolling stock would then go via a dedicated leasing company.

[Interpreted] Then another question by [indiscernible] regarding the statement that Stadler has a good capacity utilization and need additional orders in the next few years to secure jobs in the long run. Can you explain that, CEO Markus Bernsteiner?

[Interpreted] Yes, Markus Bernsteiner says yes Stadler Rail has a very good capacity utilization. We have invested a lot in production capacities. The orders take years to be executed. If for instance, you win an order today, it can take up to 5 years until we have finished production of the vehicles until the last vehicle has been delivered.

So on the one hand, we have a very positive order intake order backlog with CHF 29.4 billion. This is all planned as capacity utilization. So we do have planning, but of course, we also always have potential for new orders.

[Interpreted] Then a next question by [indiscernible]. How much is the Swiss franc amount by which you will be impacted by the U.S. trade tariffs in the year 2025?

[Interpreted] Well the U.S. customs tariffs, I mentioned that in my presentation. We do have a factory in Salt Lake City that was built in 2016. And we need to meet the requirements of the Buy America Act, which requires 70% of value creation in the U.S. We currently have 70% to 80% value generation in the U.S. And in addition, we decided that we would expand production capacity, meaning that we can increase our value generation in the U.S., meaning we will exceed the 80% level, and the rest is being sourced from the Eurozone, where the customs tariffs are at 15%.

And of course, the actual figures depend on when revenue is recognized, when the vehicles are handed over. So I can't give you an exact figure, but I can tell you that in many contracts, we have a change in law clause included. So if the laws change, you can also discuss customs increases with the customer and potentially pass on the additional cost.

[Interpreted] Then we will now start with the English question. There is one question from Akash Gupta, JPMorgan.

I Can you hear me?

We can you hear you. Thank you.

Got 3 questions as well, and I'll go one by one. The first one is on tariffs. And I mean, I listened to what you have said so far. But basically, apart from tariffs, we also have inflationary headwinds in the U.S. with a lot of volatility in metal prices, in particular, which are significantly above now compared to where they used to be a few years back. So my first question is, when we look at this overall inflation, including both tariff and non-tariffs, especially what you are sourcing from the U.S., how does the cost picture look like? And is there a risk that the margin could come out to be materially lower than what you budgeted at the time of bidding? That's the first one.

Sorry, I barely can hear you. I couldn't understand you. Can you please quickly summarize your question again?

Yes. So I mean, thanks for providing the color on tariffs. So I think you said tariffs is not really that material given you have more than 80% or you will have more than 80% sourcing in the U.S. But the question was, outside of tariffs, we have also seen significant increase in metal prices and other cost elements. And therefore, my question was that when we club the inflation in domestic market with tariffs, is there a risk to margins in the U.S. projects, that they come out to be significantly lower than what you budgeted at the time of bidding?

[Interpreted] If I understand correctly, you would like to know about the inflation effects in the U.S. and to what extent this has an impact on our margin on U.S. projects.

Akash, thanks for the question. So far, we do not see an impact on inflation stemming from the tariff discussion in the U.S. And we haven't seen an impact yet. And what whatever will come in the future, we need to see. Important is also to understand that all our contracts have indexation clauses in there which also cover the impact of inflation going forward. But that's all I can say to that.

Okay. Then we go further to one question from Citibank, Vivek Midha. Please, can we have your question?

Can you hear me well?

We can hear you well. Thank you.

I'll stick to two questions, if I may. The first is a clarification on working capital. Thank you very much for your comments so far. I'd just like to clarify, it sounds like the negative net working capital balance is likely to decrease again in the second half but remain negative, and then you expect that negative working capital balance to continue going forward. So should we think that 2026 is likely to see a further reduction in the negative net working capital balance? Or do you expect it to be more stable? Any further color on how you expect next year to develop?

My other question is on 2026. Thank you for your color so far. I appreciate you haven't given a guidance on the EBIT margin for '26. But do you have any early thoughts at this stage given what you can see about where you think you can land on '26?

[Interpreted] Okay. The first question was regarding the negative net working capital, whether it would further go down in 2023.

We expect the net working capital to be further reduced again in 2025. And my current expectation is also that we will see a reduction in 2026. Also making a clear comment together with that, that advanced payments and progress payments can be very bulky. So you can have swings. But I think for me, I've always said that is that we work -- we have -- we keep a negative net working capital position. That's the question one.

[Interpreted] And the second question that was regarding the 2026 outlook, whether we can already make a statement.

[Interpreted] Regarding 2026, we are giving no margin guidance. But in the midterm, our guidance is 6% to 8%. However, we cannot be specific here because the effects of the flooding last year are not yet fully clear, and that is why we cannot give guidance for 2026.

We go further to the English written questions, comments to English.

[Interpreted] So we have got one question online regarding the minority shareholder effect in 2025. [Foreign Language] decrease in minority [ interest ] in 2025. We have clarity here [indiscernible].

[Interpreted] Raphael says I've actually already answer the question. It's together with participation with minority interest, which generate a massive FX result in the first 6 months, and that basically has to be shown or singled out and reported as minority interest.

Then there is a second question. What are your plans, if any, to recover and maintain Stadler's attractiveness to shareholders? [Foreign Language]

Maybe I also can answer the question, focus on operation and deliver on our promises. And I think a very important element to this is focus on production output, which then will also secure the revenues for 2026 and the following years.

[Interpreted] So once again, we will focus on our operating business, deliver on our promises. And what is very important is the increase in production output because this will guarantee that we can actually execute our high order backlog in the years 2026 and following.

[Interpreted] So these were the English questions. We've got two additional questions that have come in. One by [indiscernible], he's a free railway journalist, and he also had a question about the [ Swiss Federal Railways ]. They want the [ Swiss Federal Railways ] want to buy high-speed trains for over 300 kilometers per hour which Stadler like to [indiscernible].

So Markus Bernsteiner says [ SPD ], they are one of our key customers. We have very good supplier and customer relations with [ SPD ]. We are in constant contact and yes, we are interested.

And now a question regarding the situation in Valencia, [indiscernible]. All 40 suppliers in Valencia, are they back in business? Have you expanded your supplier network there in order to reduce future dependencies?

[Interpreted] Well, these three environmental disasters have helped us refine our already very good risk management. We are currently building up redundancies, build up second source suppliers. And among the 40 suppliers that were affected, we accompany them closely. But there are still some challenges that we have faced with the year, but also, we are trying to make sure that our suppliers deliver on time again.

[Interpreted] Thank you very much. This brings me to the end of this press conference. You'll find all presentations and documents on the Investor Relations on our website. Thank you very much for your interest in Stadler. The team here Bussnang [indiscernible] you a successful day. Thank you very much.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]