OC Oerlikon Corporation AG

Good afternoon, ladies and gentlemen, and welcome to Ehrlichon's full year results presentation. I am Éric Jamin, Head of Investor Relations. I have here with me Michael Suss, our Executive Chairman, Marco Freidel, CFO, and Dirk Lindsmeyer, COO. Michael will start with a strategy update and an overview of 2025. Marco will then highlight our financials and outlook. We will end with a Q&A. With that, I would like to open our presentation and hand over to Michael. Michael, the floor is yours.

Thank you. Good afternoon, ladies and gentlemen. Let me take the opportunity to get with you through a little bit to the year 25, what we have done, what we have achieved, and give us a little outlook for 26. So as announced in 2024 in February, two years ago, We have executed by February this year with the closing of the cell of Baumark along a way to become a pure play company. Pure play company means that we are a material science engineering company. We're doing PVD, CBD coatings, 3D printing, building the machines for all these procedures. and produce our own and develop our own materials this out of a widely spread out organization um internationally 37 countries we are covering with a lot of service centers so this transformation is somehow where the cell of biomark is done what's still what's still on the way is where we have started with three industries. We are now in 11 industries. We deepened our relation in industries, and we're sharpening our setup of the management team by profession and by age in the right way. We built a pretty resilient value growing from our markets. Not all our markets moving in the same direction as we will show you later on, And everything is built on a strong innovation pipeline where we have, especially in that industry where we are still remaining, we have always invested 5% or 6%. As a group, you remember maybe the four, but the investments we have done in OSS in the past was closer to the six. Meanwhile, with a more efficient way of R&D, we are somehow in the 5%, but we have not lacked any innovation power. What's as well important is that the strategy to become more agile and leaner as well in administration, but not only. We're still working on getting our sales forces leaner and closer to the customers in other areas where we use all kind of the technologies which are available. from our ERP systems, which we have harmonized the last couple of years, CRM and others. But we have almost half, and maybe Mark will touch that point a little later, we have almost half of the costs for administration since 2019. So taking that, having a look on where we are and where we want to go. You remember as well that we embarked with mainly tooling and cutting tools and forming tools story, some automotive. but not too much else. And we had PV decoding, not really CBD, not thermal spray, not that much material science, which we all built in the last years together as a core of a company which is unique. Sometimes it's good to be unique, sometimes it's a disadvantage, because especially for you, to compare us with someone is always difficult, because we are the white unicorn. With that technology strength, with that technology combination, There is no one out there. There are some people who are playing in the field of material. Others are building machines. Others have some thermal spray services. But the combination of technologies in that way as we are doing it, if I'm allowed to say, is awesome. And there is no one else. And as we have spread out the last couple of years and diversified, this competence is in more fields now. We are today with energy, which stays for oil and gas industry and power generation, tooling, as I mentioned, forming tools and cutting tools, automotive, aviation, including aerospace, channel industry, which today as well covers semiconductors, medical, and others. We have embarked now to make semiconductor medical more visible. by a better size and by a better accessibility for us to the markets now. So generally industry will always cover that industries which are not big enough yet to show them as on their own. Luxury, we will touch that a little later in my presentation. And last but not least, defense. We are since decays in the defense industry. in the past directly with early control drivers indirectly over decades as well with the coatings and the powders for the jet engines and for some some stealth technologies where we supply powder as well but not so much directly which we are which we are now more considering but we have to see where our competences and our capabilities could contribute in the best way to defense, and I have to reiterate, we're talking about defense and not attack, to defense a society where we are living in or we want to keep it livable. So to get closer to the customers, we have embarked in 2022. So we started in 2021, the process. In 2022, we rolled it out. And within Asia Pacific, Americas, and Europe, We have the three major hemispheres. Europe still is bigger than the other two. You should consider that Hariri, for example, with its revenue is fully in Europe and is not spread out in Asia Pacific and Americas, and as well Inglas has a certain proportion in Europe. So if you take more of the core of the core business, they are already more comparable between Europe and Asia Pacific. America is still a little smaller. One of the major reasons is we are a long time in America with thermal spray. We are probably 20 years now in America with the PVD business, and there is more service business to come on PVD. But as US was never strong in tooling industry, or let's say not never, but at least in the last two or three decades, there are more other areas, like semiconductor industry, where these competences and capabilities will play a role in the future. By that saying, as I mentioned in the third bullet and introduction, innovation for us and to be leader in innovation is key for everything what we are doing. And you have here some examples on equipment, on components, and on codings. By the way, this is the way how we in future as well want to present the company. But maybe Marco as well, you will touch that point later a little bit. The equipment and materials business is mainly driven by thermal spray equipment as well for pvd but the most pvp equipment stays in our own service centers components either it's aircraft components by album or its components by hrs flow or others and then the coatings and the coatings a lot of the of these coatings are pvd coatings or cvd coatings for our service centers with all that and with and in line with the digitalization strategy where we can use new ways of technology to strengthen our footprint. I give you only two examples. One example is that we have a virtual coding center program, which means we link in real time the coders together, the ones who are not that capable to do that. We have it at least on a daily basis. End of this year, we'll have 200 out of our 450 coders real-time linked. And then to use these technologies to optimize the utilization, the way of maintenance, the forward-looking planning, and to get – this will have a strong contribute as well in the way how we use our capital. The other one, total different way, we have in San Diego as both Coperta – In 2016, Scoperto was a carve-out of the University of San Diego and was at that time already leading in the AI-based development of materials. Now, in our geopolitical days where Yttrium, for example, sits on the export control list in China since April, it makes a lot of difference if you have the capabilities, as we do actually, to develop 16 new alloys per week and to test them. and figure out what kind of elements and what kind of alloys could help us to reduce or even to eliminate yttrium as a rare earth material in a lot of our applications. And why are we talking about yttrium? Most of you may never heard about that. That's one of the 17 rare earths And it's the material which you need in any hot segments of gas turbines. So either gas turbines for power generation or gas turbines for commercial flights or gas turbines for military flights. All the hot sector has thermal barrier coatings and bond coatings based on yttrium. And these are life-limited parts. So it's not that you have it built once and then it's done forever. You need them on a consistent base. And in 25, we had significant issues to get deetium for our customers, but we could make it. For 26, we're almost assured that we can make it, so we have it covered. But nevertheless, we have now entered a way to find different elements and different alloys to either, as I mentioned, to reduce or even to compensate deetium. rare earth materials, which are today mainly coming from China, and it's not because China is the only place to have these materials, but as well that China has, the last 20-25 years, took the opportunity to get all the refinery processes into China. So even if you have each from other countries, they're typically moving through China. So I don't want to deepen that more, but it shows you how important this material science competence is and how long-term we have thought about that when we already entered that field in 2016, 10 years before people even have thought about that this may have a strategic value to secure our supply chains in the future. And based on these competences, our customers gave us this year, we cannot mention them, but big customers in the U.S., gave us a supply award. Our customer helped us to come with Naval. Naval is the laboratory of the Navy to help us and it will be financed by the US Navy and US Marine. to finance a new group of alloys, high entropy oxides. It's a coating which helps you to reduce significantly on airfoils the erosion, and in parallel you get, on top of that, you get high turbine intake, which is more power. So I give you some examples only to understand, because we are a tech-driven company, and a lot of things what we are doing is not very obvious for people. So I just bypassed at my office the flame for the Olympic Games, which we have coded, but we couldn't talk about. Otherwise, the Olympic administration would have charged us a huge amount of money. But it's where we're behind. So there is not, as we always say, there's not a single day in life without Erlikon, but maybe you're not even aware about. But that makes our story that strong. So why we bought in 2023 Riri and why we have bought Cordura in 2021? Because we are convinced that the luxury coatings, the coatings in luxury products, which are today almost, not 100%, but mainly by electroplating, is a fantastic field for us to transfer that into PVD technologies, to replace that with PVD technologies. And there's two major reasons behind. The one reason is a simple one. You need up to 90% less material, which is simply a cost question. The second one is that these materials are dirty materials. So to get a kilo gold, or even a gram of gold, you need one ton of gold ore. By the way, in rare earth, it's similar. You have 3 to 5% of rare earths in a ton. So you need, for 30 kilos, you need one ton of ore. That shows you that to avoid these procedures, and even to think about to use it in much thinner layers, has an economic, but as well an environmental effect. And last but not least, why we use tungsten today out of recycling is because tungsten is one of some arts of tungsten. or on the export control list as well from China. And here we have found solutions to take the recycling methodology, change them from drill heads and to use it to rework it. So these are all various where we are in. So luxury we bought. We had to restructure somehow a little bit because after COVID-2022, and I have to mention, the timing was probably not the most luckiest one because when we bought the company after COVID, everybody was expecting that the luxury market bounces back and comes back strongly. But unfortunately, the real estate bubble, which is still a big issue in China for the consumers, in combination with a lot of small and mid-sized companies, suffered a lot or even disappeared in the way of how China was handling the COVID pandemic. is led to the situation that there is not the highest consumer trust in the market in China yet. So the growth you see in China today is probably by two-thirds driven by infrastructure investments and less by consumer. This will come back, probably not in 26, but there is a certain indication that in 27, 28, this story comes back, and then we are very well positioned, and in between we do our homework. As we typically always have done, if markets be not in favor for us, we made our homework. So some markets as aerospace, as energy are in favor for us. Some markets like automotive and some parts of the general industry and the tooling are under pressure. To one extent, because of the tariff policy, it probably slipped to the next one, you have the markets. Tariff policy is never good because tariffs are not good for trust, and if there's no trust, it's not good for economy. And I'm actually convinced that a tariff doesn't help nobody. It makes a strong economy weaker and it makes a weak economy even more weaker and more dependent. So there will be finally a better understanding that this doesn't help, but it will take a while. In between, we suffer by that indirectly because the tooling industry, the channel industry, the automotive industry, they are taken by some unsecurity. They don't know where to go. But this is not only the tariffs. This is as well what happened the last five years from EU, giving total different directions in the way how we want to handle our energy policy, how we want to handle our car policy. To get out by 2035 and say we don't drive ICEs anymore is simply ridiculous. It's nonsense. I don't say it's stupid. That would be way too harsh, but it's nonsense. And it's not well thought through. And it's harming massively our own industries in Europe. It doesn't help anybody. But nevertheless, it's impacting markets. So the tariffs, this EU story, in combination then with the question mark, who is with whom in a partnering process in the future? Is it China, Europe, China, U.S., U.S., Europe? Who is together in which sense? This has an impact of our business. And if there's no trust, people keep their money a little bit more together. That has an impact on luxury. It has no impact on aviation because aviation is driven by recovery and more demand on aviation and commercial, but as well by aviation and military. Only Boeing and Airbus wants to go higher in their monthly production rate for narrow-body aircrafts that shorten mid-term range from 60 to 75, if you sum that up, that's 1,500 engines additionally per year, which all of that needs coatings, a lot of them. And they need equipment, which is driving, actually, somehow our business on the fuel side and our equipment side. Same is for big industrial turbines. There was the last 10 years, and there wasn't that industry until 2015. At the peak, we had in 2008, 300 plus. Then it dropped, and the last 10 years was around 100, 110. Now we are above 200, and this is for several years now. If you talk with the GE, if you talk with Mitsubishi or Siemens, that's the big three industrial gas turbine players, they all confirm. We are 200 plus, and this will last for a while, because gas-fired power plants, even in a combined cycle or even combined heat and power, are the best alternative to replace coal and to have a massive impact on carbon emissions, because they are not zero, but they are low, and they're always available. So taking all that, it's a mixed picture, but still, that's why we went plain and not up in ourselves' top line. On top of that, I would like to say, without a strong Swiss franc, we would be a half a billion stronger. And some people could say, but that counts for all companies in Switzerland. Yes, but we, as different to some others, have even a certain cost position in Switzerland. We still employ, in Switzerland and Liechtenstein, more than 1,200 people. So this is a certain amount of money. We do our R&D mainly in Switzerland. We have a lot of our equipment manufacturing in Switzerland and Liechtenstein. So Swiss franc harms us somehow. On the other hand, it gives us benefit when we do refinancing and other stories. But is it a tailwind? For us, it's not. So very often we've been growing 5%, 10% the last couple of years in certain markets, and it was more or less eliminated, not because only of dollar weakness, but because of dollar, euro, rupee, RMB, yen, and whatever you have. Let's face it, they're all somehow even towards the euro, but especially to the Swiss franc, they all have reduced significantly the currency rate. And this is an effect which we managed. And by that, we can even consider it very strong that we kept our top line in sales neutral. And we gained 6.5% of our intake, which gives a positive outlook. We're still a little bit careful. That's why we said what we said. But throughout the year, there's a certain optimism that in 26, we maybe start running, and in 27, we start even running faster. By that, the key figures, you will touch them even more. The only important part of that is 6.5% more order intake, almost flat in sales. Leverage ratio comes down from 3.4 to below 2.5 band of the year. But here again, Marco Flavio will explain that more later. And the book to build is with our 1.08. For the given market environment, in a very good level. So ESG-wise, not too much to add. We are a company where ESG is part of our DNA. Why? Because we make products better. Either less consuming, a softer, a better surface, harder. Whatever the case is, whatever we do and we use our products, It drives the sustainability of our customer products. And this is then expressed in the way how we do when you compare that, that we're saving only with efficiencies in aircrafts. We're saving almost one year of Swiss carbon emissions. But as you have a significant amount of by the tooling industry, simply on metal coatings, what we do here. But this is sometimes difficult to understand. You should go a little bit deeper in the strong way of our sense of sustainability. Finally, I would like to conclude, and then we have more time for the Q&As. We successfully devastated Bamak. I have to say probably we could have made it even a little faster, but there was some dispute what is the best way to. But in the end, we did it. And we closed it by February this year. There was a chance even to close it in August, September last year. Not last year, in 24. But we did it in a very difficult market environment for a more than fair value, and we helped both for us with the QPlay and for Rita to get a real future with their technologies, because being only in cotton business is not a real future. So we helped another Swiss company, which is important and high traditional, and we helped Dirtica. The Clear track now on pure play execution, I think I mentioned a lot. We can deepen that when we have the Q&A's. The strong one, insect 25, is at least a certain, a little tailwind, where there's more to come. But with our cost measures, with everything what we have driven the last couple of years, And sorry to say, there is sometimes some restructuring and some write-offs. When you're in Europe, and when you have sites to correct in Europe, in France, as we have closed the site in France, we have closed the site in Germany, this doesn't go in line without spanning. So now we could simply stay with that and live a little longer and leave it to someone else, or we discover it and resolve it. And sometimes maybe it's not super nice. But it's necessary. We have always done that what was necessary in this company. In the last 10 years, with all the divestments and differentiation into different markets with our core technologies, all that didn't came for free. All the engagements and digitalization, that did not came for free. The 3D printing capabilities where we are nowadays strategic partner for Northrop Grumman and others are to come in the U.S. Where we make money now in the U.S. after learning all that, developing an industry, making mistakes as well, but it's an R&D program. But this is what describes future. If you don't do that, you can harvest, you can have nice numbers, but then some when you don't have a future. And we are here having a historical obligation. We are celebrating this year 150 years of Erlikon. And Erlikon was up and down in these 150 years, but it was not only surviving, it was always contributing to the Swiss society. And this is what's our intention as well. That's why we invest in Switzerland, despite the strong Swiss strike. That's why we have R&D and machine building in Switzerland. And we are sure that we can afford it, even if it's sometimes harming. Is it always nice? No, it's not. Is it doable? Yes, it is. And if a tech company like us cannot do that, then we can give up Switzerland as an industrial base. We are not ready to do so. That's why we are here. And in the end, we are paying a dividend where some of you may say that's too high. We say, as we have done the last 10 years, when we sell a big asset, a huge portion, two-thirds typically, stays in the company. And either it helps to grow, but with some of the dividends in the past, not the dividends, with some of the money of the past of divestments, we bought new stuff, and some of the money went into dividends. And I think that's more than fair and reasonable, because as a shareholder, our shareholders own a part of the company. If you sell it out, it doesn't belong to the company anymore. And they have the right to take a part of that. that we contribute to them. And the logic to give one-third to the shareholders and to keep two-thirds in the company was a very healthy one in the past and is a very healthy in the future. And that's why we came to the 85 Rappen for this year. You can say maybe even because of 150 years, but it would mainly insist on we sold something. It's not ours anymore. Part of that is the shareholders, and part of that stays with the company. And, Marco, you will deepen that thought as well. But we have taken almost $500 million of that to dilute or to reduce our debts. And with that, what we have seen, we are on the right way to get by 27 on a 2.1, sorry, 2.0 EBITDA debt ratio. We are absolutely clear that this is not only achievable, that we can make that. And that's why we are as well very convinced that we have to and we want to pay that dividend. So because the company, now with the book value gain we made, with more than 40% equity, with a strong cash generation base, with a fully filled pipeline on innovation, with a strong position internationally in the different regions, in the gross markets, in all the industries we are in, this is a very resilient company, and this is why we can pay the dividend. Thank you so much. for now. Now, Marco, maybe you go deeper in numbers. And then we are already, and Dirk as well, he is here today with us because Dirk is since one year now on board at CIO. CIO has to do a lot of this operational stuff, so if you have one or the other question to him as well, highly welcome.

Thank you.

Thank you, Michael. Good afternoon, everyone, and welcome to our full year results presentation also from my side. Thank you. I will start with our results, then provide more details on our key initiatives to strengthen financial performance and will finish with the outlook for 26. First, as Michael mentioned, Erlicom closed the sale of Barmok on 2nd February 26. Accordingly, Barmok is presented as discontinued operation in our 25 balance sheet and income statement. The cash flow statement remains fully consolidated, meaning it still includes bar mark as of year end 25. Detailed information on these continued operations can be found in note 2 of our annual report. In 25, we delivered strong order intake at 1.655 billion Swiss francs, up 6.5% versus prior year at constant FX. We saw momentum improving towards the end of the year, which helped us to close with a book-to-bill ratio at 1.06, driven mainly by strong orders in materials and equipment. Sales remained stable versus 24 at constant FX at 1.568 billion. A slight growth in second half, supported by low comparison base, offset the decline in H1. This achievement in a weak economic environment proves the resilience of Erlikon, which was also achieved through the execution of the strategy of end-market diversification. Aviation industry dynamics were supporting our performance, and also in energy, we saw a positive trend driven by our industrial gas turbine business, supported by AI data center's extensive energy needs. Nevertheless, most of our other end markets remain subdued. The volatility generated by global trade tensions and geopolitical uncertainties weighed on top-line growth in particular in tooling and automotive. In luxury, the weak customer purchasing behavior, especially in China, continued to impact the sector performance. These industry dynamics required us to take actions and restructure some activities, in particular in Europe. I will come back on this later in the presentation. From a regional perspective, APEC outperformed, especially India. Our long-standing presence in industrially developing countries enables us to support global customers as they expand their operations. We are benefiting here from the new geographical organization introduced in 22, which has strengthened local coordination and commercial execution. Our global footprint also helps reducing exposure to trade tensions and ensure optimal service to our customers even in uncertain environments. Operational EBITDA decreased by 11%, to 271 million Swiss francs and a margin of 17.3%. Our profitability was supported by innovation, pricing and efficiency measures, which counterbalance the negative mixed impact from our short cyclical service business and from FX headwinds. Our cost-out actions related to headquarters downsizing are on track, with more than 50% having shown financial effects already in 2025. The remainder is expected in 2026 and 2027. Moreover, structural cost-out actions in the business taken in 2025 will increasingly produce effects and support return to positive net result in 2026. With the next slide, let me provide you with more details on our continued actions to drive profitability. Our commitment to strengthening the profitability of our businesses remains a clear priority, also with the target to improve capital return. Alongside driving organic growth, we are putting equal emphasis on establishing the right structural cost base and optimizing our portfolio of products and technologies. Since 2019, we have reduced overhead expenses in admin by 45%, representing a substantial improvement. The decrease further accelerated in 24 with the announcement of the divestment of Barmok. We saved, with these cost outactions, more than 60 million Swiss francs in the last two years and structured EarlyCon as a smaller, more focused company. Digitalization, automation and footprint optimization of our coding centers are driving operational simplification and efficiency, which are key drivers to ultimately improve profitability. For example, we increased our number of coders which are real-time connected to around 125 and aim to further expand this year by up to 100 more. This helps to optimize equipment maintenance schedules, utilization rate, which also enables better reallocation of capacity to coating centers with higher demand. The better data transparency for our operational assets and the optimized asset allocation logic will be a key contributor to further support operating leverage and thereby improve capital returns going forward. The regular review of our portfolio using our capital allocation framework ensures that resources are directed towards profitable and growing businesses. This review resulted in restructurings in H2, primarily affecting our combustion engine-related automotive business in Europe, as well as a smaller part of our luxury business. These actions aim to sustainably improve profitability and ensure that resources are allocated adequately to support profitability in the medium term. We are also sharpening our R&D approach with a much stronger focus on commercialization. Starting in 26, we incorporate the adoption readiness level approach into our processes. This aims to focus more effectively on customers and market adoption of our new products. At the same time, we are streamlining our offering by eliminating subscale and dilutive products and replacing them with more efficient solutions. This shift enables us to price upcoming innovations at meaningfully higher margins compared with our legacy portfolio. Overall, improving our company, and position us to deliver sustainably higher profitability and improve capital returns going forward. With that, let's move to the balance sheet on the next slide. Let me now walk you through the balance sheet and the performer impacts of the bar mark divestment. At closing, two-thirds of the paid purchase price of $716 million were used to repay our 475 million term loan significantly reducing early cons leverage ratio the closing also generated the net book gain of 287 million which will be booked in 26 on the result from discontinued operations pro forma of the proceeds and net of proposed dividend This reflects a strong improvement of our equity ratio from 25% to 41%. Leverage at the end of March 26th, considering the proceeds of the divestment of Barmark and after the proposed dividend, is expected to decline to 2.7 times net debt to EBITDA. Looking ahead, we plan to further the leverage in 26 and 27 towards our mid-term target of below 2 times. In 2025, we also actively managed our debt profile by issuing 350 million bonds in September and repaying 250 million bonds in November. Our liquidity position remains strong with around 960 million of cash and available credit lines at year-end. Going forward, liquidity management will benefit further from the Barmach divestment. Our restricted cash, mainly in China, has decreased by around 185 million following the closing, improving cash availability and lowering financial costs. With regards to distribution to shareholders, we are proposing a stable ordinary dividend of 20 European per share, supplemented by a one-time extraordinary dividend of 65 as a result of the bar market investment. With the strength of balance sheet and enhanced financial flexibility, we are well positioned to support strategic execution as markets recover. Next, on to our ESG ratings improvement. In 25, we maintained or improved our ESG ratings across major agencies, keeping us within the top 20% of the industrial sector. External partners and agencies recognize our leadership in sustainability and innovation. Our MSCI rating remains at the maximum AAA rating, placing us among the leaders in our industry. Our CDP scores for climate change and water security improved to B, demonstrating progress in transparency and emissions management. These results validate our long-term commitments to responsible production energy efficiency and sustainable innovation. For example, in 2025, we invested 85% of our total R&D expenditure in sustainable products. Our solutions significantly improve the efficiency, performance and sustainability of our customers' products and operations. Overall, our ESG performance reinforces trust with customers, employees and investors and supports our competitiveness. Let's conclude the presentation with our 26 guidance. Turning to our 26 outlook, we expect the year to remain influenced by geopolitical uncertainty and soft end market dynamics. Sales are expected to increase by a low single digit percentage organically at constant effects, reflecting the expectation of a continued soft food environment in general industries tooling, automotive, and luxury markets. These headwinds will be partially offset by continued strength in aviation and selected energy applications. We also anticipate the continuing negative mix effect, particularly from service activity, which impacts margin in the near term. Despite this, we expect an operational EBITDA margin of around 17.5% for the full year. This is supported by the structural portfolio and footprint optimization actions initiated in 2025, which will increasingly contribute. On this basis, we anticipate a significant improvement in ROSI, advancing in the direction of our weighted average cost of capital. Our 2016 guidance reflects both the realities of current demand conditions and the benefits of the actions we have taken to structurally improve profitability. With that, let me open for Q&A.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode and eventually turn off the volume from the webcast while asking a question. please limit yourself to three questions and place them one by one each, hence allowing the company to answer each question individually before posing the next question. Anyone who has a question may press star and one at this time. The first question comes from Sebastian Kuhne from RBC Capital. Please go ahead.

Thank you for taking my question. I have a few, actually. First, I would like to better understand the volume-price mix situation that led to the very strong order intake in Q4. You mentioned some shortage of rare earths and tungsten and the sharp price increases. How much of that growth that you saw in Q4 is actually just a pass-through? Is there raw materials going in and going out without an effect on profitability? That would be my first question. Thank you.

Thank you for the question, Sebastian. The strong order intake in Q4 was mainly driven by our materials and equipment business. And to the second element of your question, yes, there is an effect of that, but it's also in organic terms the orders are increasing significantly. So it is not just the price dynamics you were describing.

Thank you very much. Then on the restructuring, can you give us an idea of the scale of it and how the cost savings will come through in Europe in the next 12 to 24 months?

Yes, so looking at the restructurings in H2, they were mainly focused on our combustion engines for automotive business. In Europe means first and foremost Germany and France. Also some restructuring in that area in the United States. In luxury, we had a smaller restructuring of one business in Italy. In terms of materialization, we saw first effects coming through in 25, but expect them to further materialize as we finalize the execution measures in 26.

And the scale of the savings?

Yeah, the scale. How many dollars involved? Staff is in 25. In Europe, it was around about 300 people. And there is some more to follow in 26 when we execute the measures.

Understood. Thank you. And then finally, can you give us an idea of the current capacity utilization in your service business, in the tooling business in Europe? You know, you have a high automotive exposure here. you know, how much more could you, in theory, pass through the equipment annually compared to where we are now? Are we talking 50%, 40%, 70% where are we standing currently? Thank you.

So maybe I take that. The utilization is different if you take the service centers and if you take equipment materials. In materials, actually, somehow, at least in some alloys, it's the supply base, which is limiting us how far we can grow. But utilization is, meanwhile, on a level that we have ordered an additional consort for Plymouth, and we are considering a third one to come, because it's a sustainable long-term lasting demand on certain materials, what we are doing. In addition to that, what we do since two to three years now is that we monitor our fleet of coders. which is roughly 500, and where I said 450 of them are monitored either on real-term, real-time, or at least on a daily period. They've even sent them from service centers in one region to others where the demand is higher. So you don't do that on a weekly basis, but we really see, and you have utilizations in some areas where you have only 40%, and in others you have 70% or 75%. But be careful, even the 40% can be a very high profitable business. It depends then how we can add to this business more to utilize that equipment. And what we have decided two years ago, two and a half years ago, that wherever there is equipment in the system available, you have to consider that first before you build or buy new ones. What I have to mention is, We built new diamond coder and new graphite coder, which in the past was technology which we have acquired. We have developed that and introducing that, and it was as well pushing a little bit the CapEx in the past. And this year, we have a certain CapEx by Plymouth to get a consortium and to reallocate the three sites in Plymouth. in Switzerland, where we combine Wohlen.decon and Winterthur in Reichwald, which will start somehow in summer 26 and be finished by the end of 26, only 27. So please keep different. There's materials capacity, very well utilized, still some headroom in some areas, but next capacity already to come. There is equipment where we can... We are producing somehow, not on the top line, but we can, let's say, do a little more. So there we are almost fully loaded. And then there is, and this is, by the way, already that we're talking about order intake for 27 and even beyond, because there is a pipeline, even from our customers that don't need it tomorrow, but they see a consistent growth, and they see a consistent growth as well in the way to coat parts. And then there is the service centers, where, again, within the service centers, you have different kinds, and you can remember what I've shown, the different codings. Now, each coding runs on each coder, and here the digitalization helps us a lot to optimize. Does that answer somehow your question?

Yeah, it does. Perfect. Thank you so much. Thank you.

The next question comes from Tobias Klopper from the Zürcher Cantonal Bank. Please go ahead.

Good afternoon. Two questions from my side, if I may. I will take them one by one. The first on the margin guidance is that for an increase of roughly 20 basis points compared to 25, with stabilizing end markets, corporate cost savings and restructuring benefits, this might seem rather conservative, as you already mentioned. Can you give us some more light on why this might seem that way? Is the mix effect expected to be even more negative in 2026?

You want to or should I do? You can start. I start. Maybe Mark has a better idea to answer than I have. The 7.5, is that what we see for the year? Is that what we have on hand? There's some indication it could become a little stronger, but we are not in a position to do so. Maybe we have to see when we have the half-year results to give, let's say, better guidance. We definitely want to avoid that last year. You remember, 24 was a very strong year for us. And we looked at markets and thought, okay, these markets are doing well. That way we made a budget for 25, which was very aggressive. And then we had to correct the consensus and to correct the guidance in the middle of the year because all these turbulences by tariffs, All these turbulences that in February and April, because we first had to react on. When you get told certain alloys and tungsten cannot be exported anymore, each one is blocked, you have to work on that, and you get somehow some hits. And we want simply to want to avoid that. So is it conservative? No, I think it's a good base. Could be more in. If it works as we think it works, yes.

I also think, Tobias, that we, on the elements that we have under full control, we definitely did our own work again in 25. Positioned the company very solidly, restructured where it was necessary. And now, given the geopolitical situation, there remains some uncertainty. Some of our businesses can react quite quickly. But overall, I think that is what we currently see as an outlook.

And maybe, I think we're all in the same boat. You have a Supreme Court decision on tariffs, and you have an administration who reacts completely different than anybody would expect. Typically, you respect the Supreme Court decision and not counter that with violating another law and phrasing new tariffs. So this is the environment given where we are in. And to judge that and to build that in a business plan, sorry to say, that's a challenge not only for us, for a lot of others, but as we are in certain sensitive areas, with the materials, with aerospace, with all this stuff, it's a case. And then we have main industries still significantly tackled by these tariffs. And here I really talk about automotive and automotive supply industry. which is a strong consumer on toolings and coatings. By the way, there is something which will replace partly that because aerospace becomes more and more market for coated tools, which in the past was always a little bit shy because there was always the fear that the coatings could have an impact on the surface for the materials where they're working on. So deep science has not embarked fully yet. So defense, we're talking a lot about theoretical orders, but the supply base is not ramped up. The supply base is not there. So these are areas where we're positioning ourselves as well. For example, in coating. If you have to have more armored steel to a machine, you need top-notch coatings. If you have to composites to a machine, you have to have top-notch coatings. Does that happen already? No, it does not, because the supply base is not there yet. The orders are placed. The willingness is out there. Now the supply base has to get ramped up, and then it has to start the industrial operations. This is the environment we are in, and probably after the lessons learned, 25 towards 24, we try to do something balanced in 26.

Thank you. Very helpful. Then to my second question on the leverage of where do you see the primary lever to achieve the leverage ratio of one, two times by 27? Is it primarily EBITDA growth or debt reduction?

I can take this one. It's both, right? At the moment, we are operating at EBITDA profitability that we certainly don't see as the mid-term target where we want to end up. So that is a clear lever there. Then it's, of course, the cash flows that we expect to generate as we move ahead. And also on the CapEx side, it's further diligence by better using asset reallocation. Mike was describing it before, looking into our utilization, how we operationally perform, and see that we can allocate the assets to the markets that really need them. and also innovate based on the existing culture base, right? We don't have to put a new culture in the fields for every new product we bring to the market because a lot of our innovation happens in the process itself. So I think it's that. And then last but not least, it's the working capital. I think if you look at the numbers, we already made a good step in the end of 2025, using the working capital in a better way, optimizing cash from there. And we see also further upside on the working capital front as we move ahead.

So there is not a big, if I may, to add to that. This is not the big blockbuster, the one and only story. You have to code a lot of stuff until you make 1.6 billion revenue. And you have to optimize. And sometimes in our business, it's the little things which counts. That's the way how we manage overviews and payable receivables and even inventory. In inventory, we have achieved a lot in the materials business. We cleaned up 2,000 different material numbers, 2,000. There's still some headroom, but we're operating on that. We have a CRM system which was not there in that quality the years before. We got it fully operational in 2025. We're using it now. We have harmonized continuous improvement systems, three different ones, into one. And it gives you a very strong transparency of where continuous improvement works better than somewhere comparable to some other places. And to have this best practice sharing. So what we are doing, we're using the technology available to get our highly spread out company virtually like it would sit on one place. And this gives a lot of optimization potential, which was not available simply the years before. And a lot of things had to happen, cleaning up 21 ERP systems, which we had, into one. And it was, believe it, it was a very sad and severe operation. And it costed us a significant amount of money to get there. CRM was the same. Continuous improvement, same. Digitalization. The DigiHub, meanwhile, is really paying back that what we have invested. Because we have systems which we even now from competitors and others getting asked if we don't sell that. We have reduced in HS flow the typical time for an offer of four weeks to two days by using digital solutions. We have an early Q system developed where now our OEM customers from the aerospace industry are asking to get their systems. So we have a technology position which is not falling out of the blue sky. It's hard work consistently over years, not over months, to get there. But this gives you then the resilience and the leading position because nobody can follow you because with a finger snip, you don't get there. You have to go the same hard way as we have done. But this gives me as well the confidence with the team which we have built up, which is a lean team, meanwhile. We have an AC of five. We have an MBM of 15, including the five AC. We have a top management team of 40. That's it on 10,000 people. And this is the way that all this small stuff on operations, on inventory, on the sales side, for sure, pricing was as well an issue. We had some issues in 2021 to get the prices on a level. But if you look in, we have done the pricing story pretty good. Meanwhile, we have to see that we don't overstretch it. It's the combination out of a lot of things. And for sure, if there is in the two or three industries where we're very strong and we have headwinds, If that wind turns into a little tailwind, then you see significant additional effects. But even without that, we are convinced that we can improve the company further on. And don't nail me any ends. Is it 20% EBITDA margin or 19.5 or 20.5? Midterm, we are sure we have a 20. Then we go for that. But we go as well in the combination of margin and investment and, by the way, top line. And this combination will drive the company. We slimmed down the company. We have to be aware that now with 1.6 billion, we are not a 3 billion company anymore, which we have shown in our cost positions. We have somehow now to grow. We're growing massively and mainly organic, not too much inorganic. But we would have the way to finance inorganic as well. But we're not looking for that because, as initially explained, we are unique. There is not the one and only target which would help us a lot. This is a specific situation. And what we learned now in this challenge, I would not even mention a crisis, but in the challenges around rare earth and critical minerals, our customers unanimously gave us the feedback that they discovered how dependent and how important early count is for their key components and for their supply base, which gives us as well a pretty strong position. Hopefully it was not too long, and hopefully we have touched your point.

No, no, really helpful. Thank you.

The next question comes from Sebastian Vogel from UBS. Please go ahead.

Hello and good afternoon. My first question is with regard to the organic sales growth guidance for 2026. Can you elaborate what sort of pricing assumption is going into that one?

Yeah. And we don't give further details on the inclusion of price increases, but you can assume that it is not mainly driven by pricing. It's the opposite.

Got it. My second question, again, they're not hard numbers, but more of a rough indication just to understand a little bit more the marginal effect of business mix. Can you give us the sort of indication where you stand in terms of equipment versus material versus service? of your top line there? That is some sort of rough indication.

A rough indication is that service business typically is in higher double digits than others, but equipment and materials is as well in double digit. And we have cleaned up that. Material business was three, four, five years ago was single digit or even negative. equipment business when we got this story in eight to nine years ago was negative as well and was highly fragmented. Meanwhile, we have with solution one and solution two, two modulized systems where we can even do customization in a much better way as in the past. We have... It was difficult even to figure out how much equipment we have out. We discovered somehow 2,500 systems. Probably there's 1,000 more out there which we don't even know. But these 2,500 systems, most of them we have some service for. But a lot of them are not equal. They're not even something in mind. But they're two together. But now with this new setup, we have that. So both businesses... But let's say all these businesses are in double-digit now, but it's different quality of double-digit, and that's why the mix. If service, cutting through services is still one of the best businesses in quality of earnings, and if you compare that with the materials business, you have a mixed effect in the numbers. And deeper, I don't want to disclose it. You want to add something?

No, there was the question from Sebastian regarding the sales distribution. So on the sales distribution, so one third is roughly the coding services and the other third is the material and equipment and the rest is the component business in terms of sales.

And Sebastian, one thing to add on the margin, and we plan to have a CMD later this year as we announced, and one element is that we've communicated mainly on the level of EBITDA, but if you compare the three businesses that Michael and Dirk were just describing, of course, we have different levels of capital intensity in these businesses. And as we want to strengthen our capital return, Rosie, going forward, there will be certainly internally and potentially also externally more focus on that gap and narrowing it to improve returns.

I think it's good that you mentioned the capital market, which is somehow planned for the 6th, 1st half of September. where we would definitely go deeper in details as a, let's say, follow-up to the capital market of 22. A lot of things have changed. I think it's necessary to give you somehow a new base where we are and where we come from. And it's mainly driven by three elements. The one element is the regionalization. The second element is the few of industries. And if you take tooling into two and energy into two, then we're serving actually 11 industries, including then defense. that's the industries which we're serving. And then in the end, the segments, that's the surface, the coding services that shows equipment and components. And so this is kind of a cube. That's kind of a cube model. And then I think after, let's say, the capital market will give you some more insight. We cannot disclose everything today.

Got it. And just one tiny follow-up as my third question. You are potentially a little bit into that direction anyway. On the energy side, you said, right, the turbine business was doing really well. What sort of share is that as part of your energy, roughly, to have a little bit of a better understanding there?

From energy, how much is power generation? Yeah. I have to guess because I do not even fully memorize energy. But I would say that if I take oil and gas and this one, it's a 70-30 towards power generation, 30% probably oil and gas. That could shift, by the way, because actually when we're talking about oil and gas, we are in the upstream. So we are in the drilling business. Actually, only 50% of the drilling rips in operation because oil price is on 60 or 65, if I'm right properly. So if that goes up, drilling rigs goes up, that could shift from a 30 to a 50-50 gap. But for the moment, it's the big gas turbines which are driving, and it even has started. So it will enlarge. And then don't forget about there is industrial gas turbines, a smaller range. So like the SGT-800 of Siemens, which is running very well. It's the industrialized aeroderivatives. from GE. Don't forget about there is Doosan coming in the market. So the big three is Mitsubishi as the smallest, then Siemens and then GE. And then there is Doosan, that is Antaldo Energy in Italy. And there is not really in the market yet, but the United Gas Tribune of China. which had the first fire in 24. These are the six major players. But then there's still an IHI. There is a theta pillar with solar, which is doing it in that area. But the market is very transparent for us because as some people of us work there, the energy in the aerospace market is very transparent. And believe me, there's not too much else others can do than we do. So, from the equipment side, we have a very strong market-leading position. From materials, where we still have some companies that are doing better than us, for example, PRACTURE and the AM powders, is dimension-wise bigger because they focus more on the materials than we have done. We have focused more on the applications. They have focused more on the materials. This will not turn, but this will give us more headroom now in the materials store in the future, running that material consumption through our own applications. which are mainly suppressors, cooling plates for any mobile data centers. What I'm saying by that, a fighter jet is a flying data center. A big jet is a flying data center, like when they do reconnaissance. If you have a radar station, it's a mobile data center. They need all very efficient, low weight cooling systems. We just have embarked on that, but we have a strategic partnership with Northrop Grumman. I'm convinced there will be more to come with others because we have a technology proven in 3D printing with Airbus for the satellite RF antennas where they have proven that the 50 kilo antenna in the past is now a 5 kilo antenna. And so with the concentration in Huntersville of our AM business, we have started to make money on. We could have done a little bit more last year already, but there was certain bigger volumes shifted into 26, but then we see that in 26. So that's the overall picture.

Got it. Many thanks.

The next question comes from Louise Beyond from other Europe. Please go ahead.

Hi, good afternoon. Thank you for taking my question. So my question is about the – it's a follow-up on the energy segment. And I'm wondering, have you increased your price given the strong demand? Our growth is only driven by an increase in volume. And also, could you give us an idea of the – breakdown by geographies and where do you expect the strong growth maybe in the US but is there other regions?

No, we don't disclose geography but what you can do by yourself the big three players in that sequence Channel Electric when she even over Siemens Energy and Mitsubishi Energy they are the top three they cover 80% of the market And they place their gas turbines globally. So we sell to them. They make the gas turbines and they ship it. So when you say geography, Chiba Nova sits mainly in the U.S. Siemens sits mainly in Europe, but they have a site in the U.S. and they have a site in Saudi Arabia. And Mitsubishi sits mainly in Japan. And in size-wise, GE, Vinnova has twice the amount of running gas turbines above 100 megawatt than Siemens has, and Siemens has probably three times more than Mitsubishi. So, and this gives you as well the dimension. So, more I cannot disclose and I will not disclose. It's mainly driven by volume, something by price, but believe me, these customers are as well price sensitive. They only pay more if you really contribute significantly more, especially in materials. They're very good in materials, but there are alternative sources as well, besides the thermal barrier coatings. But here as well, we cannot screw them, because it's a long-term relation. If you screw them once, they have a long memory. So you try to do a fair deal, and going more with volumes and with the gross, because that's much better than to squeeze the last drop on pricing. But for sure, we look on our pricing power. I have to say, we have done a lot between 21 and 23. a major position, because we've been in some areas to keep, and we have taken out even certain materials where we say, okay, that's interesting to do so, but the volume-wise, it's not worth to do it.

Yeah, maybe to add something, Louis. I think as we move ahead, right, we should look at our equipment and materials business much more as one, right? Because with an equipment sale, you're number one, you have great opportunity to lock in after sales business, which is very important. And number two, our materials run largely also on our equipment. So looking at these businesses in combination, is actually a very important element of how we look at that.

And to be fair in that sense, we've been pretty good in locking in the after sales business. So 50% of our equipment business today is already after sales. What we haven't done is with the longer or the elder machines to see who is doing it after sales and this we started to investigate and to offer packages which are for the customers more attractive instead of going to some field and forest suppliers. But if there's a translation in the proper way. The other element is the material story, and here we've been not good enough because we are selling equipment, but our equipment runs really better with our materials, and this we haven't shown the customers in the proper way. We've been very often selling equipment. The business is together now since 2023 under one roof, but we have further that strengthened. And there's more and more now, the materials sell via the equipment. So when you get the equipment, you get all the materials, and we can prove that it creates additional benefit for the customers. For us, it's an additional field for future growth, which we have not utilized in the past properly.

Okay. Thank you. Maybe a last question. Could you give us more details on the competitive landscape in China for the automotive market? And to what extent are you able to shift from your European automotive business toward a market in China?

So I will try to answer that, and then colleagues, you can jump on. First, Chinese automotive market is a total different to the European one because the mission profile is totally different. In the past, you had the big ICEs, luxury brands, because Chinese successful people wanted to show their success. This is still somehow the case, not that strong, but don't underestimate that. But the mission profile in China is to go 30 kilometers or 40 to work and then back home. They don't have holidays. They don't go out for the weekends. That's why the electrification in China took that fast speed. And, by the way, it was supported because, maybe you're aware, to get a plate for an ICE in Shanghai costs 15,000 bucks, and for an electric car was for free. So it was really a penalty to get an ICE. Now they're coming to the limits with 50%, but why am I describing that? A BYD with that, what they're doing today, is not a clear target for us because they don't cover their batteries with a good production system. They have six, not BYD, but the Chinese electromobility industry. They have a couple of hundreds, like 600, 700 killed people every year by battery burn-ups. They don't care. I have to say that that's hard. They don't care. So it's totally different if you go in Europe, and we do for the Q6 and the A6 already the TIS system, which is very protective, much better than any mica. We have projects with BMW, with Mercedes, but these companies are still targeting more the premium segment. And we with our technologies are more focused on the premium segment. We are not a mass segment player. We've been on piston pins, and we will be on piston pins and other stuff. You're having cars, maybe even Chinese cars, where we have some of that. But do we get out with a Geely or with a BYD for a $20,000 car? No. That's not our business. And they can only maintain that if they still further utilize the low labor costs, low social standards, low environmental standards, low energy costs, and low building and other construction obligations. If they would follow that, what we have in the U.S. or in Europe, the prices would be double or triple. So, by the way, this is not the right way to follow them. It's not the way to ignore them, but it's not the right way to follow. We have to position what we do, and we have a good market in China with good margins, but we have to stick them to stay with our technology position. The more they're looking for higher technology, the more they are our customers. But be aware, the mission profile, how people are using a car in China with five days holiday, and even after 10 years, you have probably 50 days holiday, they use it for the Moon Fest, and they use it for the Chinese New Year. And they typically take a train or a plane and get it together all together. So in Europe, every longer weekend, people getting all their cars and driving across Europe like hell. And in the U.S., we will not find that. We have somehow difficulties to see the real electromobility in the U.S., because whenever you are in the U.S., the distances and the availability of electricity to reload is simply not given. That's in America comparable. Africa comparable. So it's simply, how to say, a toy story that ICEs will disappear, but the trust level has to come back. There is an open technology race. Not driven by funds by governments, because the governments will not have the funds. Whatever EU has done in the past, saying I put 5,000, 10,000 on a car and then you buy it, for sure you buy it. Why people are buying actually hybrids? Because they have half fixation in Germany if they're running as a corporate car. But is it a smart solution to run a car which has two and a half tons and has two engines and two electric systems? No, it's not. But this situation is where we are in. We're playing on the e-mobility side as on the ICV side. Playing both, but we're not blindly going to China and say, I want to be in China to make money, because the solar industry doesn't make money in China since the decade. We have to see how much Chinese auto manufacturers, and especially their supply base, will make money, because we are part of the supply base. And if only the OEM makes money and the supply base doesn't make it, and gets from 1% or 2% average margin, it's not the market to be.

Okay, that's very clear. Thank you.

The next question comes from Alessandro Folletti from Octavian. Please go ahead.

Yes, good afternoon. Thank you for taking my questions. I would like to also dig in a couple of segments, starting with tooling, if possible, Is this basically a one-to-one exposure to the machine builders, basically, and particularly then in Europe? So we need to see, I don't know, the Gildemeister, the Trump of this world, to have bigger orders for that business to come back.

No, it's not only that. It was. It was very strong driven. Historically, why we have this strong footprint in Switzerland and in the DACH region, because a lot of this machine building industry was here. And the tooling industry was a domain of Central Europe. Now, that's weaker, but... There is a replacement ongoing. When you look into the aerospace industry, as I mentioned, a lot of tooling in the aerospace industry was and is uncoated. Because there was always this thought that it could poisoning the surface or the quality of the material being machined. Now, More and more of these companies are reconsidering that position and are working on, and we have tests, and even already achieved certain codings in their cutting tools and in their forming tool groups. Will that replace completely the demand of ICE? Probably not. But it has a different quality. It's higher position, but even today, we are not supplying our codings for each and everybody, but more for the sophisticated applications. And this is a market where you would look far too short if you look only in the machine building industry. And especially now with the defense sector, with a lot of armored steel, with a lot of new trucks, new military trucks, tanks, composite materials, even missiles, they all have metals which have to be machined, which was not out there. So there is somehow and how much that replacement is, I cannot answer. If I could, I probably would not, but I still cannot. But there is a replacement. And by the way, the cars are not disappearing. So whatever you need in forging, whatever you need in trusting, whatever you need not in the powertrain, it stays. So even if you have looked at the base of an electric car, there's a lot of machine parts as well. But there was the unsecurity of the industries where to put the money on. And this still stays. And that's why they're pretty hesitant. I'll give you an example of our in-class, which in-class is depending a little bit from how much new models are coming to the market. And there was models planned of 180 to 190 the last two or three years. In average, there was 150 only. Because the models are pushed into the future not knowing it. Will they launch them? They want to launch them, but when? The right timing to launch them? When to bring them? And then with which kind of powertrain? And this unsecurity is somehow in our business today, wherever it's automotive. Or shooting. Has that answered a little bit of your question?

Yeah, a little bit, yes. What do you expect more? I don't want to go further, but... No, we can discuss that. Well, I would like to know what you think about the numbers. We are now sort of below 300 million in tooling and maybe around 300 million in automotive as well. So 600 million, the two of them, if I calculate correctly, it was much more than that in the past. And I just wonder how much it can go back to, to what level it can go back to.

I have to check, but I think it was not that much more. in the past, but maybe you are more aware than I even. And there is a recovery, definitely. How much that will be, I cannot say. I would guess, and I don't want to guess too much around.

No, that's fine.

And I have shown you there are more areas which have been definitely not there in the past, which will have a significant requirement on tuning. Even if you have 15 Airbus per month and 15 Boeing per month, all the wind is getting built out of aluminum. It's not that there are no industries which have a demand on cutting tools. And when you have cutting tools, the number one address to go is us.

Okay, good. Thank you very much. The second question would be more in luxury. Maybe that one also a bit of a detailed question. I'm referring to your slide number six where you show the number of expected number of pieces with PVD coating. And I'm aware that this is probably still a very low amount part of your business. But it's also, as you mentioned, part of your story why you entered in luxury. So can you give an indication – of how relevant the PVD now within luxury is already now?

I just question myself if we should disclose, but I think I can give you a direction. We are somehow in a range of 7 to 10% today, and we see pretty fast getting to 20, 25. Then there's a further way to 50. And then there comes the big hold point, because the question is then, will there be some application which is simply not versatile for PVD, but then it's potentially not even our application. And second, we have new developments, like in Deep Black, which is a There's a scale. Today the deepest black is a black 32. Don't ask me how to scale that. Our deep black is a 22. So it's significantly more black. We developed that for the luxury industry. But now meanwhile we have requirements or let's say potential projects with the designers of automotive because they look for this black. With designers from watch industry they look for more deep black, which is still luxury. And get it or not, for surgery instruments, because we coat most of the surgery instruments today already with black, and they don't want to have any light reflections. And the deeper the black is, the less reflections they have, and the better the surgery can happen. So you develop something, and this is exactly the way how we want to operate. We develop something for one application, and then we see where this application makes sense to get further on.

All right.

So the PVD story is growing, and it's growing because there is a massive move from brass-based electroplated materials to MIM stainless steel PVD coated materials. By the reasons I mentioned, much less material, much more sustainability for the customers. If you buy something expensive, you want to have it sustainable. And you don't want to be mixed up with all the fakes coming out of Asia. So the drivers for that are our customers, which are the Louis Vuittons, Dior, Chanel, Hermes, and so on. But they get driven by their customers to show them that their products are more sustainable and special. People who buy luxury want something special. You don't buy an expensive watch to get the time, because this you get from your iPhone. You buy it because you want to have something special. And this is with jewelry, which is for us not a market yet because simply the volumes are too small, too much individual. But to the luxury goods where we are on today, this is a story where we see significantly growth. It took a while, by the way, and it still takes a little longer because the overall rebound is

uh or rebounds of this industry hasn't hasn't took has has not taken place yet all right good uh thank you very much maybe i can ask my last question maybe it's directed to the cfo uh can you give an indication of your context expenditure for this year and maybe next year as well if you already have it yeah sure um we

We plan with a capex envelope of around 100 million overall for 26. This will be higher by around about 30 million because we have an expansion project in Switzerland. Michael was talking about it. It's a technology compost in Compton, Aargau, which actually consolidates three sites we have in Switzerland and builds a technology center for our thermal spray business. And this is currently in construction. So there is a capex element, a significant one in 26. But in the long run, you can assume it's in the area of Compton.

Right, exactly.

And there is the materials project in Michigan in the U.S., which also absorbs some of the additional capex. But midterm, you can assume around about 100.

Right. And around about 30, 35 million in intangible assets, sort of always in the past term.

Yeah, I mean, if you look at the R&D side, it's around about 25% of our R&D spend we usually capitalize, and then there is some IT on top.

Okay. Okay, good. Thank you very much.

Thank you.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Anne-Erik Jammies for any closing remarks.

Thank you very much for your time today. I hope you enjoyed the presentation, and I'll remain at your disposal in the next days to go more into the details and answer further questions. Thank you very much.

Thank you. Bye-bye.