Bechtle Ag

Good morning, ladies and gentlemen. Welcome to our analyst conference on the second quarter and thus the first half of 2025 at Bechler AG. Thank you very much for your interest. The news about the overall economic situation has been as changeable as the weather in recent weeks. Is the tariff dispute agreement to be viewed as positive or not? Will the government's investment booster bring the anticipated economic revival? And if so, when? A stock market analogy might be that bulls and bears these days both find enough food to strengthen their positions. And what is the situation like at Bechtle? On the one hand, we continue to see positive signals coming from some of our international markets. And German public sector clients are also showing the first cautious signs of a recovery in demand. On the other hand, there is little momentum from our SMB customers in Germany and the French market remains extremely challenging. Against this backdrop of contradictory framework conditions, we can be generally satisfied with the figures for the second quarter. For us, one thing counts above all else, We are moving in the right direction and all key figures are up compared to Q1. As usual, today's presentation is divided into three main sections. We'll start out with business development as reflected in the key economic figures for the second quarter and first half of 2025. of the current financial year, followed by news highlighting important events, important for the future of our company, things that go beyond the figures. And finally, we'll wrap up with an outlook for 2025. First of all, let's take a look at business development. We saw noticeable improvement in our operating business in the second quarter compared to Q1. We are not yet where we want to be, but the trend is positive and we're heading in the right direction. Our top line grew more noticeably than in the first quarter. In particular, we are seeing initial positive signs from public sector clients in Germany. Demand under the framework agreements we have won is picking up again. This is also reflected in our gross margin, which has reached a historic high. It is true that costs continue to weigh on our earnings. However, compared to Q1, we were able to contain the decline in earnings. Cost increases are at a comparatively manageable level. But let's first take a look at the top line development that is business volume and revenue. Business volume growth picked up noticeably in Q2 with an increase of as much as 5.1%. We are at the upper end of our guidance for the full year. Organic growth was 3.4%. There are two developments that I would like to highlight in this context. One, our international companies grew by 9.1% in the second quarter, driven by outstanding performance in the Benelux countries and the United Kingdom. And two, in Germany, our public sector business grew by over 5% in the second quarter. The development in Germany in particular makes us confident about the second half of the year. We will come back to that in our outlook. These developments are also reflected in the segment breakdown according to regions. As already mentioned, Internationally, business volume rose by 9.1%, following 1.1% in the first quarter. In organic terms, growth in the second quarter thus amounted to 5.9%, a clear sign of recovery. This positive development is all the more remarkable, considering that one of our most important markets, France, is still struggling with very challenging conditions. However, we have been able to more than compensate for this with better performance in other markets In Germany, too, the trend was positive, albeit at a significantly lower level. Growth was 2.4%, falling 0.6% in the first quarter. In organic terms, our German business grew by 1.6%. Let's now take a look at our revenue. We're all familiar with this picture by now. Due to the application of IFRS 15, Our revenue figures are smaller than our business volume. The real message here is that our software business is performing better than the pure infrastructure business. This is, of course, partly due to the ongoing weakness in the hardware business. However, we can also see that our positioning is very successful, for example, in the cloud and security environments. Our project business is doing well. And we are establishing ourselves as a trusted advisor for our customers, a kind of navigator toward future-proof IT. In structural terms, revenue development is basically comparable to that of business volume. We see an improvement from the first to the second quarter, but there's still room for improvement. Let's now move on to the earning side, starting at the very top of the income statement with the gross margin. And here, I can only repeat what I just said. Our project business is doing well, and so is our software and cloud business. This is reflected in the gross margin, which not only remained largely stable year on year, but has also reached a historically high level. Cost of materials developed roughly in line with revenue. This is all the more remarkable given that in the previous year, we had benefited from a positive one-off effect due to the reversal of risk provisions. This effect amounting to as much as 7 million euros was fully reflected in cost of materials as a reducing factor in 2024, thus making the current year-on-year comparison particularly challenging. Overall, however, we can clearly see that Bechtle is not affected by a structural problem. It is the overall economic situation that is weighing on us. Our business model and our positioning in the future-oriented IT market remain intact. Let us now move downward in the income statement at the development of our operating result. The bottom line basically shows the same trend as the top line. We see a significant improvement in the second quarter. Having said that, this should not gloss over the fact that a decline of around 19% is, of course, unsatisfactory. Although costs rose only moderately and the increase in Q2 was parallel to that of our business volume, costs do continue to weigh on our earnings. Nevertheless, it should also be noted that the prior year basis was very high due to the aforementioned non-recurring item. Excluding this one-off effect, in the prior quarter, the EBIT decline would have amounted to around 13%. Mind you, I'm not trying to gloss over bad figures here, but... After an operating decline of 32% in Q1, we are now at only 13%. This constitutes a positive trend and also indicates that with a further upturn of our business in the second half of the year, we can still achieve our targets for the full year. And to conclude this section, let us now come to our operating cash flow. At 45.2 million euros, our cash flow is back on the positive side in Q2 after being slightly negative in the first quarter. Overall, our cash flow follows the usual seasonal development. After a very high level, especially last year, we have now returned to a more normal level. On a positive note, our measures to improve receivables management are sustainable, and we have been able to maintain the achieved sound level. Knowing Bechtle, you won't be surprised to hear that our liquidity situation remains very comfortable. Cash and cash equivalents amounted to 522 million euros as of 30 June. This constitutes a sound basis for continuing our approach to grow more strongly again in the future and to play an active role in the European M&A market. And now let us turn to our employees. As of the 30th of June 2025, Bechtle had 15,608 employees, that is 302 people, or 2% more than in the same quarter of the previous year. However, the majority, that is 232 of these new colleagues, joined Bechtle through acquisitions, accounting for three quarters of the total increase. In purely organic terms, our workforce grew by only 0.5%. Compared to the 31st of December 2024, the number of employees has even declined. As you can see from the chart, we took advantage of natural staff turnover in both the first and second quarters to rein in personnel costs at a reasonable level. Having said that, we are aware of the fact that we will need all hands on deck once our business picks up. This is why it remains our goal to keep the number of employees relatively stable in organic terms. And now let us move on, as usual, to what we consider to be the non-financial special events in the second quarter of 2025.

These latest announcements are all essential for Bechtle's future. We're going to look at a personnel matter, two acquisitions, an important step in our cloud business, and another success in our business with public sector clients. Let's start with personnel matters. As previously announced, the supervisory board of Becht AG has appointed Christian Jähle as CFO to the management board. The 49-year-old will start on the 1st of January 2026 and will initially take over responsibilities that were previously held by the CEO, i.e. myself. He will therefore also play a central role for investor relations. And I will, of course, be responsible for introducing him to the community. Christian Jehle was most recently CFO at Computer Center in the United Kingdom, and prior to that, he held similar positions, also in the UK, at the information services provider Experian and the software company Finastra. Prior to that, he spent 11 years in various finance-related management roles at SAP in Germany, Japan, and the United Kingdom. The appointment of Chris Jehle should also be seen in the context of succession planning for myself. As most of you know, my contract expires in December 2026. The search for a suitable CEO for Bechtle has therefore become a priority. Well, our M&A activities are just as international as Chris Jehle's CV. In Spain, we have taken a major step in this direction with the acquisition of Grupo Solucia Tecnologia, headquartered in Seville, with additional locations in Madrid and Murcia. Founded in 2005, the IT service provider is particularly well established in the public sector and enjoys an excellent reputation in the Spanish market. In 2024, Grupo Solucia generated a business volume of just under €100 million. The company has a broad-based IT service team that is active throughout the whole of Spain. With this acquisition, Bechtle's team in Spain sees a five-fold increase and is significantly expanding its service portfolio in the areas of workplace, software development and IT services. Echle is also expanding its presence in the Netherlands. With eStorage, we are strengthening our position with an established specialist in highly complex data infrastructure and cyber recovery solutions. eStorage is based in Utrecht and has been operating very successfully in the Dutch market since 1999, particularly for customers in the financial services sector. The next bit of news concerns our cloud business, which is getting more and more important for us. Bechtle has received the so-called C5 attestation for its cloud platform in accordance with the criteria of the German Federal Office for Information Security, BSI in short. The independent audit confirms that Bechtle meets the strict requirements of the C5 criteria catalogue. and thus meets the highest standards of information security in the operation of cloud services. This includes in particular robust measures to defend against cyber attacks and safeguard data integrity. The interstation also helps Bechtle customers to meet legal and regulatory requirements and to implement effective risk management. In particular for customers in the public sector and for particularly security conscious companies, this certification is a decisive criteria when choosing their cloud service partner. Bechtle is thus further expanding the security and sovereignty of its digital infrastructure. And on a related note, we would like to conclude with the sales success in our public sector. In a rather unusual area this time, Bechler has once again secured a win in a nationwide tender. Following last year's successful bid for a framework agreement for the provision of low-code platform licenses with its technology partner Appian, Bechler has now also been awarded the contract to supply implementation resources for related digitalization projects. The new agreement is valued at approximately 450 million euros over a four-year term, with the option to extend for a further two years. The current win results in a complete offering now available from a single source. covering everything from licensing, development, rollout and operation to the further development and quality assurance of applications based on APN's low-code platform. The offering fully meets current requirements for IT security, accessibility and seamless integration into existing IT landscapes. Low-code technology enables accelerated development of digital applications and automated processes. This brings us to the outlook, ladies and gentlemen. As already mentioned several times, we see a significant improvement in our business development from the first to the second quarter, and this trend continued in July as well. This trend makes us confident. that we will be able to continue to grow in the further course of the year and thus achieve our targets for the full year 2025. But our forecast is naturally subject to positive development in the general environment in the back end of the year and above all to further improvement in the situation of our public sector customers in Germany. We, however, expect a noticeable upturn in our public sector business, particularly from September onwards, i.e. after the parliamentary summer recess. Our public sector business in Germany in particular should, alongside continued positive development in many of our international markets, be the main growth driver in the back end of the year. with one or two acquisitions potentially supplementing organic growth. Well, in concrete terms, this means for our outlook. In terms of business volume and revenue, we are already within our forecast for the full year at the half-year stage. However, we still have some catching up to do in terms of EBT. We are aware that the EBT growth target for the second half of the year is ambitious. However, we are confident that we will be able to achieve our EBT targets, albeit at the lower end of the forecast published at the beginning of the year. The lower comparative figures from the previous year are helping us here, but, more importantly, our business as a whole is picking up speed again and the top line is growing. In this respect, our guidance remains unchanged. We want to increase business volume slightly. EBT could nevertheless decline by up to 5% for the year as a whole. We therefore expect the EBT margin to be below the previous year's level. That concludes my presentation on our performance in the second quarter of 2025 and the outlook for the remainder of 2025. Thank you very much for your attention. And I'm now happy to take your questions.