Bechtle Ag

Welcome, ladies and gentlemen, to our analyst conference covering the first quarter of the current financial year 2025 at Bechtle AG. Thank you very much for your interest. We are all currently living through turbulent times. We have almost become accustomed to irritating news from the USA, but the political scene in Berlin too seems to be good for a surprise, as we were reminded this week. Having said that, some other new developments do give us cause for optimism. A Ministry of Digital Affairs endowed with far-reaching powers is, I believe, an important first step in the right direction. What matters now are reliability and dependability. Only then will our customers be prepared to invest in the future and in their European locations. Unfortunately, uncertainty still dominated in the first quarter of 2025, and this is also reflected in our figures for Q1. We will delve a little deeper in a moment. As usual, today's presentation is divided into three main sections. As usual, we'll start by looking at the key economic figures for the first quarter of the current financial year, followed by a few selected important events beyond the figures. And as usual, we're going to conclude with an outlook on the current financial year at Bechtle AG. But first, let's take a look at business development. Unfortunately, the first quarter of 2025 continued along the same lines as the previous quarters in 2024. Rarely have framework conditions been as taxing, and the first official moves of the US administration have done nothing to ease the tension. As a result, we continue to see our SME customers and the public sector holding back on investments, particularly in our two largest markets, Germany and France. Alas. In Germany, at least, we already saw the first slight improvements in March following the federal elections. However, in parallel to the very subdued top-line development, our costs have risen, not dramatically so, but nevertheless to a degree that is putting significant pressure on earnings. So let us first take a look at the aforementioned top-line development. and then add revenue. Business volume was up slightly. Overall, however, the development clearly fell short of our expectations. Looking at individual months, we can see that January and February were very weak indeed, and that it was not until March that the slight recovery mentioned earlier began, driven in part by positive developments with public sector clients, especially in Germany. As we have repeatedly communicated on various occasions, our volume of framework agreements with public sector clients has reached a historic high. These framework agreements have already been signed, the budgets have been approved, and the processes and workflows are in place. We are thus prepared for the call-off behavior of our customers to improve in the coming months. Internationally, we continue to see a positive trend in individual country markets. However, the situation in France remains extremely difficult and challenging. Let's now take a look at revenue development. Revenue continues to reflect mainly the positive development of our software business. The difference of three to four percentage points between business volume and revenue is in line with what we saw in most previous quarters. However, here too, a pickup in our business in the second half of the year is possible and the initial signs from March and also April are pointing in the right direction. Q2 will show whether these trends prove to be sustainable. A quick note at this point. Some of you may have noticed that we have deliberately refrained from breaking down the figures into our traditional segments. As we announced, we will be changing our segment logic starting with the 2025 annual report in line with the changes to our board functions. We are thus already paving the way, if you so will, for Bechtle to report primarily along the lines of regional segments. Having said that, in our official reports, so to speak, we are still using the old segment logic, as we can see in the next chart, earnings development. In Q1, our earnings performance was unsatisfactory. We had already pointed out in advance that we do not expect an improvement of the overall situation during the first half of 2025 yet. However, this was not fully reflected in market expectations, which is why we chose to issue an ad hoc pre-announcement of the key figures for our business development on the 24th of April. There are three main reasons for the Q1 EBIT development. One, personnel costs rose by around 18 million euros. This is partly due to acquisitions, partly to wage increases, but also partly due to the effects of the increase of the social security contribution threshold in Germany in particular. And two... we received lower bonus payments from our partners than in the previous year. Unfortunately, in 2025, we were unable to realize a carryover effect from a strong Q4, as was the case in other first quarters. And three, Depreciation and amortization are also 6 million euros higher than in the previous year. Here too, we see effects from our acquisitions, but also from our ongoing investments in our own IT or in buildings. And to conclude our review of the key figures, let's take a look at operating cash flow as usual. Our cash flow is slightly negative. As you can see, however, from the chart, this is entirely reasonable for a first quarter and thus not to be considered a negative outlier. On a positive note, we are continuing to see high cash inflows from the reduction in trade receivables. And here, I would like to emphasize once again that this reflects our successful measures in terms of receivables management. However, there is also a strong cash outflow resulting from the reduction in trade payables. These had built up towards the end of last year, so what we are seeing now is a counter effect. Our liquidity situation, however, remains very comfortable. Total liquidity, including time deposits and securities, amounts to as much as 616 million euros. This gives us sufficient scope for our M&A activities and investments in Bechtle's future viability. This brings us to the latest trends regarding our employees. As of the 31st of March of the current financial year, 2025, Bechtle had a total of 15,729 employees, that is 484 people, or 3.2% more than in the same quarter last year. 370 new colleagues joined Bechtle through our acquisitions, thus accounting for 76% of the total increase. In purely organic terms, our employee numbers only grew by 0.7%. On the other hand, you can also see that the number of employees has fallen slightly compared to the 31st of December 2024. We are very much aware of the current challenges in the economy and, in particular, of the pressure caused by personnel costs. We have therefore made greater use of regular staff turnover than in previous quarters in order to ease the situation of personnel costs somewhat. And as usual, let's now move on to the specific events in Q1 that we consider to be non-financial.

Due to the early stage of the current year, this time these current reports relate to two very important areas for us. One, an important trait for appearance that emphasizes our sales activities and very essential for us due to the sheer relevance of this sector, successes in business with the public sector clients. Let's start with our sales activities. At the Hannover Messe from the 31st of March to the 4th of April, Bechtle presented for the first time a comprehensive integrated IT solutions portfolio for the digitalization requirements of the industry. Trade Fair presence combined the offerings of the companies Bechtle PLM Germany and Bechtle Additive Manufacturing, which specialize in engineering and manufacturing with customized industrial solutions from the Bechtle IT system houses. Though it's not new, it's not an everyday occurrence for us to have our own large booth at a trade fair. However, it was extremely important for us for two reasons, especially in the current situation. First of all, especially in times of greater restraint on the part of customers, it makes sense to show presence as an IT partner, to emphasize the relevance of IT and to make appropriate offers. And secondly, Bechtle is known as a full service provider. Nevertheless, It is always important to emphasize the wide range of our portfolio and to focus on that. And that's exactly what we've been able to show at the Hanover Fair, and quite impressively so. And the second message concerns our successful business with public sector clients. The procurement office of the Federal Ministry of the Interior and Bechtle have concluded a framework agreement for the delivery of IT security products from the manufacturer Trend Micro, as well as the provision of services and training related to the products used. The total volume of the agreement amounts to €216 million and has a term of five years. with an option for a two-year extension. In addition to the delivery of products for the production of end devices, servers, networks, and email systems, Bechtle will provide services for the implementation of the new systems, managed services during operation, and German language first and second level support. I've already referred to the historically high volume from existing framework agreements. However, we are of course not resting on our laurels here, but we want to continue to successfully expand our business with public sector clients. Finally, ladies and gentlemen, let's take a look at our expectations for the current business year 2025. As expected, the start into the new year was subdued. However, this was already part of our planning at the beginning of the year. It should therefore come as no surprise that we are confirming our forecast for March. Uncertainties remain high and have unfortunately increased due to the rather erratic tariff policy of the US administration. In this respect, our forecast is, of course, subject to a positive development of the general conditions in the second half of the current financial years. But we already registered an initial, albeit still cautious, recovery in the public sector in Germany, at the end of the quarter in March, and according to initial preliminary figures, April was also heading in the right direction. These are good signals that give cause for optimism, despite all the geopolitical and economic upheavals. Nevertheless, we remain cautious with regard to the current second quarter. We do not expect to see a broad-based recovery until the second half of the year. We are still running against high competitive EBT figures in the second quarter. Specifically, this means the range of possible scenarios remains very wide, both for the economy at large and for Bechtle in particular. The actions of the US government pose major risks and uncertainties. Tariffs and an associated trade war, unfortunately, are not off the table. There are some bright spots, especially in domestic politics. The formation of a government has created calm and cautious optimism, particularly among our public sector clients, and we feel this today. And the creation of a digital ministry with far-reaching competences is at least an important sign and a step in the right direction. So our guidance remains the same. We want to slightly increase the volume of business. We expect sales to develop below the business volume due to the continued positive software business. EBIT could decline by up to 5% over the course of the year, but there are also opportunities for more positive development. We therefore expect the EBIT margin to be slightly lower to stable. So much, ladies and gentlemen, for our performance in the first quarter of 2025 and the outlook for the rest of 2025. Thank you very much.