Huber+Suhner AG

Ladies and gentlemen, welcome to the Hoover-Suhner 2026 Half-Year Results Conference Call and Live Webcast. I am Sandra, the course co-operator. I would like to remind you that all participants have been listened only mode and the conference has been recorded. The presentations will be followed by a Q&A session. As first option, you can dial in via telephone and register for questions at any time by pressing star and 1 on your keypad. Wellcut viewers may submit their questions in writing via the relative field. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Urs Ryffel, CEO. Please go ahead, sir.

Good morning and welcome to the presentation of Hubert Suhner's half-year result 2026. For the first time, we are hosting our presentation in our own offices here in FAFICON. So we are playing a home match. We are looking back together in the next hour on an eventful first semester, which has seen industry segments performing on a very high level on one side of the scale and on the other side of the scale, a communication segment that is burdened by ramp-up costs and went into red figures. We follow for the presentation the usual structure, which means that I will share an overview with you followed then by Richard Haemmerli, our CFO, who will do a deep dive into the details of our financial results. Before the Q&A, I will provide you an outlook and also share our view on the markets as well as on our guidance for the rest of the year. Before we elaborate on the details of our half-year results, I would like to put the results into a slightly broader context. We have for the third time a semester with order intake above the 500 million mark, while last year the order intake was strongly driven by the orders from a US hyperscaler which came in between June and August. This year's order intake of 548 million barely includes US hyperscaler orders. So that is why we rate this half year's order intake as very strong. Last year's order intake in the data center area from the US hyperscaler have served for us to initiate investments into a ramp up for our OCS technology. The OCS technology has been a business with high mix and small batch nature and production. The strong backlog on this OCS technology coming from the middle of last year has triggered the investments to ramp up and to develop a high scale manufacturing with high volume and low batch. Consequently, this backlog reaches clearly into this year and also mainly into next year as very little of this backlog has already been executed and shipped. That's why net sales is clearly limping behind orders, however still with a slight growth of 2.6% versus last year. Organically, 6% growth resulted in the first six months. As a result of the ramp-up, our operating margin suffered slightly and came down by 110 basis points or was reduced by 8.4% to now 41 million or 9% EBIT margin. The strong order backlog from last year and the high book to bill in the first semester results in a high backlog of 517 million, on which also our CFO will elaborate a bit more in details. Let me first highlight the strong performance and the broadly based progress of the industry segment during the first six months. It became apparent already last year that orders are increasing in the industry segment on a broad base and these dynamics has well lost into the first six months of 26. With 242 million order intake in the industry, we have a record level reached with a growth year over year versus 25 of 42%. The momentum during the year further accelerated and has also started to show effect On our net sales level, which reached 189 million, an up of 22%. Based on this growth in sales, we could also capitalize on our operating leverage and consequently our operating profit climbed to 37 million or 19.6% operating margin. The strong development was broadly based. However, the main drivers were the two large market verticals that we serve in industry, which are A&T and test and measurement. But also all other markets have contributed strongly to the very strong performance. On the other side, we have the communication segment with a decrease in order intake and also sales. In the comparison last year, we still have some sales from our large Indian business with a mobile operator which has contributed the first three months of 2025 to sales. The order intake is slightly above net sales and contains, as I said already, very little new bookings from the US hyperscaler for the OCS technology. As a result of the time gap between sales and ramp-up cost, the operating margin slipped into the negative range and the rest of the business namely the mobile network business as well as the fixed network business who is suffering from lower demands has not been able to compensate for the ramp-up cost and pre-investments in our OCS technology. The transportation segment is on track. It is very much aligned with the overall group result. However, a strong order intake of 161 and the book to bill, which is clearly positive, sticks out and gives a strong position for the remainder of the year. Net sales came in at almost the same level as last year and operating profit climbed slightly by 60 basis points to the 9% level. When we have a look at our geographic distribution, it sticks out that we were able to achieve decent growth in our largest region EMEA with 13%. This growth in sales was mainly driven by our broadly based development of the industry business with a strong geographical center of gravity in EMEA. In the Americas, we have to record a small decline of 4%. This is due to the lack of the OCS business as of now as well as to the lack of the business from our strongest market historically, the mobile communication market. However, we will see towards the end of the year the Americas with growth compared to last year based on our ramp up for OCS. The third region, Asia-Pacific, sees a decline of close to 16%. Here, the conclusion of our Indian project with the state-owned operator shows effect, which has been included for three months in the 25 figure. We don't expect that to turn around for the rest of the year. And with that, I have concluded my very brief overview of our first semester results. And I would like to hand over to Richard Haemmerli, the CFO, for him to bring some light into our financial results.

Thank you very much, Urs. Very good morning also from my side. I'm looking forward to give you a deep dive into our financial results. I would like to start this Deep Dive with a quick historic review of the development of our order backlog. Order backlog by the end of June ended up at a record level of 517 million Swiss francs, a clear increase compared to the end of 2025 where we were at 432 million. Mainly driven by the positive book to bill of all three segments. At the same time, while we are adjusting for future demands, we have made significant investments into our capacities and also into our inventory levels. And we will allude to that in the coming slides. As mentioned by Urs, for the third time in a row, order intake was with 543 million above the 500 million line. Also sales with 457 million was higher than in the past two semesters, while the margin declined due to the investments into the OCS ramp-up. Looking into the organic growth, we have achieved organic growth on order intake of 8.5%. This was offset by FX effects and copper and no portfolio effects this year, but FX contributed with minus 4.5% and we had a slight positive. The effect of copper of 1% resulting in total growth of 5.1% for order intake. Mainly driven by the industry segment which saw continued good demand from the A&D side and the test and measurement side. Also transportation, in particular the railway side saw increased order intake while on the communication side We felt the lower demand from the telecom industry. The picture is very similar on the sales side. Also here, we achieved a solid organic growth of 6%, impacted by FX effects of roughly 4.5% and a positive gain through copper of 1%, resulting in a 2.6% growth. Also here, industry had higher shipments than in the first semester of 2025, while communication still benefited in the first half of 2025 from shipments on the Indian order was lower and transportation stayed on similar levels. Looking into the gross margin, the gross margin ended up at 36.6%, which is lower than the previous two semesters but still higher than the two semesters in 2024. Gross margin on industry and on transportation continued to continue positively while on the communication segment the gross margin was impacted by the ramp-up. The operating expense with roughly 28% stayed on a similar level as in the previous periods. When we compare with the first half of 2025, we can see that selling and marketing expenses remained at roughly 65.8 million. We saw an increase in R&D supporting our investments to 32.6 million, which equates to roughly 7.1% of total sales. On the admin expenses, we saw an increase mainly driven by M&A effects. Now looking into the EBIT bridge on the left hand side of the chart, we see the decline of our EBIT in absolute value by roughly 4 million. Industry that performed very well, contributing an additional 11 million compared to the first half of 2025, while communication EBIT came in lower by minus 13 million compared to the first half of 2025. Transportation more or less stayed on the levels of 2025. On the right-hand side, we see the margin profiles of our three segments. Clearly, the industry segment increased again compared to the first half of 2025 to a very high level of 19.6%, while also transportation increased and communication swapped from the positive into the negative effect, resulting in a total margin for the group of 9%. Going below the EBIT, we look into the financial result and here we see that our financial result increased slightly from minus 0.8 million to minus 0.4 million, mainly driven through lower FX losses in the first half of 2026, while the other financial result, the income mainly from interest, stayed on a similar level. The effective tax rate with 14.4% was extremely low in this first semester and this had mainly two effects. The first is the geographic mix where we saw higher sales in countries with lower tax rates, number one. Number two, we could benefit from tax loss carry-forwards in one of the jurisdictions. Now jumping into the balance sheet. The balance sheet size increased by 5% to $908 million by the end of June 2026. Two things stick out. Number one, the net liquidity decreased by $65 million compared to the end of last year. On the one hand, on the other hand, our net working capital increased significantly, and we come to that in the cash flow statement right in a minute. Equity ratio, we maintain the stable level with the 74% as total balance sheet size. The free cash flow from operating activities was clearly below expectations with 3 million, but mainly driven by the inventory build up that we had in the context of our ramp up on the one side for OCS, but then also the activities around A&D. So the decrease was from 63 million in the first half of 2025 to 3 million in the first half of 2026. We should also note that in the first half of 2025, we still enjoyed cash inflows from the Indian project that was delivered mainly in 2024, but also a little bit in the start of 2025. CapEx. Spendings remained on a high level with 28 million. This equates to roughly 6% of sales in the first half, resulting in a free operating cash flow of minus 25 million. Dividend payments in the first half increased a little bit compared to the previous year to the higher dividend per share that were paid out. We did not have any dividend payments to minorities and the changes in treasury shares increased due to the higher share price of the Hubert-Suhner stock, resulting in a free cash flow of minus 65 million for the first half. Now, summarizing our first half from a financial point of view, we recorded record order intake as well as record order backlog in the first half of 2026. We achieved a solid organic growth of 6% and we improved the EBIT margins in the industry and the transportation segment. On the flip side, the EBIT margin of the communication segment was negative and was impacted by the OCS ramp activities. Also, our investments resulted in negative free operating cash flows and we had quite strong negative effects, negative headwinds from the FX development. Summarizing our half year, Huber-Suhner is on a growth trajectory. We continue to invest into capabilities, capacities, and competencies. With that, I'm handing over to Urs.