Deutz Ag Akt

Good morning, ladies and gentlemen, and a warm welcome to the nine-month 2025 conference call of the Deutz AG. Please note that this call is being recorded in a replay, will be available on deutz.com later today. Your participation in this call implies a comment to this. And please welcome Deutz CEO Sebastian Schulte and CFO Oliver Neu. So Sebastian will begin the presentation with the key figures of the nine-month 2025 and then walk you through the progress made in the business units. Oliver then will provide you with the financial details of the nine-month financials 2025. And Sebastian again will conclude the presentation with a look on the guidance, after which we will move over to our Q&A session. And as always, please note the disclaimer, especially regarding forward-looking statements. And having said this, Sebastian, I hand over to you.

Yeah, thank you very much, Azara, and also good morning, everyone, and thanks a lot for joining us for this nine-month earnings call here. So let me start, actually, with a lot of confidence and optimism because our numbers show clearly that we as Deutz continue to deliver double-digit growth in revenue and new orders, rising profitability, EBIT margin now. Year-to-date, it's 5%, and I will show later, quarter-by-quarter improving. And most importantly, a business that's proving more resilient and dynamic, again, quarter-by-quarter. Our product portfolio is paying off, and the transformation towards really innovative and sustainable mobility and energy solutions is clearly gaining momentum. As I said right now, we went through this first three quarters of the year and actually following the second half of last year, every quarter an improvement. Let's bear in mind we came out of a very strong 23, driven at that point by the strong demand in our sort of heritage core markets, construction, agricultural equipment. But then there was the slowdown in demand which brought the which made our numbers in the second half of 24 in particular going down. But since then, we are on an upward trend. First quarter, 4.3% margin. Second quarter, 5% margin. And third quarter, now 5.8% margin, which is actually even more impressive given the fact that typically the summer quarter, the Q3, is seasonally A little difficult because most of our customers have at least two, three, four weeks of vacation and so do we in our engine factories in Cologne and Ulm. So, clearly year-on-year improvement and continuous momentum in margin uptake. If you look at the markets, and I mentioned earlier our sort of previous core markets, now we've been broader, we're becoming broader. So we're talking about construction, agricultural material handling, defense as the most recent addition, but also energy for our gensets. And what we see here is in construction equipment in Europe, well, the activity is still somehow muted. In the U.S., the infrastructure demand is stable, but overall, the outlook, let me put it that way, is resilient. Agri, still in the short term, fairly weak outlook because inventories have been high, financing costs have been high. have been slightly negative on the customer side, but structurally it's very, very solid. Material handling, the megatrend is helping us. Commercial logistics, e-commerce, that demands here quite stable activity in the material handling. Forklift CapEx remains robust, so that's why we see also the left-hand side positive projection going forward. And defense, of course, very strong momentum in Europe, driven by the increasing budgets and also the NATO programs in the European Union. And energy, the gensets, I mean, this is another megatrend. Girls in data centers, backup power application, and we here see a supporting expansion in all regions, but particularly the regions which are relevant for us in this segment as of now, the United States with our Blue Star business and also going forward, Europe. So, in total, we see that, you know, nine months, year over year, we've been growing 15%. That's growing above all relevant markets here, given that we're also entering into these new markets, defense and energy. If we look at, let me start with defense, I mean here really the headline is that we have been strengthening our footprint in the defense tech ecosystem. When we talk about defense tech ecosystem, I mean particular military drones, I mean military autonomous land vehicles. You will all remember our most recent acquisition of Sobeck Group. Sobeck is the leading manufacturer of electric drives, very high performance electric drives for not only military drones, but obviously that is the factor which is growing most significantly right now. We signed and closed that transaction at the beginning of September, and the purchase price was financed by a capital increase. using the 10% ABB procedure, which Oliver will elaborate on later. And the business has been developing pretty well since then, so all expectations that we placed into Silvex so far have been fulfilled. The momentum continues to be strong. Then we entered into a strategic partnership with ARCS Robotics, that's a Munich-based defense tech scale-up. Here we're not talking about drones, we're talking about vehicles, autonomous vehicles on the ground, as you see on the picture also on that page. And the idea of that partnership is that going forward we will, on one hand, supply drive systems for these vehicles, and also make our mobile energy infrastructure products and, of course, the global production network available because assembly of those products, I mean, that's something where we have with our facilities in this case in Wülfen, southern Germany, where we've got actually competency which help ARX Robotics in the scale-up of their production. And almost, well, as a nice side effect, we're also intending to participate as one of the lead investors in the next ARX funding round. That's going to happen over the next weeks. If you move on to engines, we are quite proud to be able to announce that we extended our product portfolio. We brought a new product to the market. It's the Deutz TCV24 V12 GDUL engine. That's a large engine. It's the largest engine we now have in our portfolio. It delivers some 780 kilowatts, so really on the upper end of the portfolio. It's optimized for use in gensets. That's why it's future-proof in a way that the power gen market is expected to grow very, very strongly in the next years. And obviously the diesel engine for backup power is a very crucial component in such gensets. And we were able to develop that product very, very quickly using our international partnerships, our international supply chains. And currently, this is the first product is being tested in a pilot customer, by a pilot customer in Italy, in a Gensot operation. And we also already received the first small series order very, very recently. We have planned a broader market launch of that 24 liter engine. the beginning of 2026. On top of that, partnerships becoming more important for us on a broader scale as well, because we have, over the last years, industrial engines also developed together with joint venture partners in Asia, and we're currently undergoing, or these engines currently undergoing the testing in our test benches, our test center in Cologne, in order for us to allow these engines to be offered in the future on a global scale with a very strong focus on price and performance as well. And we want to develop, or we will develop a new six liter engine, the DOTS TCD 6.0, and we will launch sort of the premiere of this very, very powerful six-cylinder engine in the Agritechniker, the leading trade fair for agricultural equipment, which is starting this Sunday in Hannover, and then being there for the coming next week. So we're pretty excited about this expansion of our engine portfolio, where we are broadening the portfolio. We're bringing particularly upper-end, more powerful engines to the market. And, of course, also sort of in the mid-end, we're utilizing our global footprint to become also more cost-comparative on a global scale. If you look at service, a very important backbone for our growth, for our very profitable growth, and here we can also proudly announce that we continue or we have continuously been growing our global service network over the last weeks and months as well. We concluded three acquisitions. Our long-lasting Turkish service partner, Çatal Kaya Makina. We closed that acquisition beginning of October. And on top of that, We widened our service network and also the capabilities in the United States most recently by achieving two mergers or two acquisitions. One is a company called Onsite Diesel and the Texas acquisition happened October 2025. With on-site diesel, we are offering to mobile and stationary full services. The customer focus here is on waste management, construction and rail, so all segments where the combustion engine, the diesel engine in particular, will particularly in the United States be relevant for quite some time to come going forward. So that's why that was the rationale behind the acquisition of on-site. More recently, just a couple of days ago, we acquired a company with a fantastic name of Double Down Heavy Repair. It's in Nevada, and it's a service company which is extremely experienced and well-positioned in repair and maintenance of heavy equipment and engines in the mining, really gold mines and other mines in Nevada, also railway construction and transport industries. And on top of that, We complement these inorganic growths with also our strong organic United States growth paths, where we opened two new Deutz Power Centers in 2025. And the plan, which is totally on track, is to open another four new DPCs throughout 2026. On top of that, I mean, that's the footprint in the market, but on top of that, obviously, we need to really work on our backbone as well, because all the parts that we deliver through our footprint to the customers, They have to come in time and, you know, the right quantity and quality out of our very, very modern global logistics center in Cologne. We modernized that with an auto store system, AI-driven auto store system, which helped us really increasing the efficiency in the management of these parts. So we're talking about more than 25,000 parts and increasing the efficiency up to 50%. So that means not only are we going to be faster, but we'll also have more space in order to grow and to really support our global footprint out of our global logistics. Let me continue then with our solutions business. Particular Energy continues with a very, very strong solid performance. The business unit Energy driven by Bluestar Power Systems in the North American market. The market is continuing to be extremely favourable and there are more and more growth opportunities. So, you know, our index is strong, very strong, bottom line most importantly. with a very high cash conversion is strong, strategically strong at Blue Star. We're also beginning to realize more and more synergies with our U.S. business. So the service operations, that's what ties it into what I said just a couple of minutes ago on our DPC growth path in the United States. So obviously with Blue Star, we're bringing products into the market with our service center, throughout the nation, we are serving them when they are in operation. And on top of that, our North African business, which operates under the name of Maggie Deutz, got a new managing director and played a new team, and they're working quite successfully on really restructuring it and repositioning it for Maggie Deutz to be really one of the backbones for Europe. And on top of that, we're looking to continue is looking here also at an organic growth within energy. New tech is increasing traction. UMS, a company we acquired earlier this year, the onboarding of the company is progressing pretty well. Lars Kohl, the former owner and one of the guys leading the business operationally, has also been named as head of technology at NewTek. We merged now the existing, sort of the formerly known as eDoids product portfolio with the product lines of UMS. So we've got a very, very clearly defined product portfolio now, and we're following literally dozens of promising leads with very, very relevant customers also throughout the world. So the momentum is improving. is increasing here, is improving here, so there is more to come in terms of positive news throughout the remainder of the year, and of course, in particular, the next year as well. And with that, highlights on our operational and strategic developments, I would hand over to Oliver before I come back later to give an outlook for the rest of the year.

Good morning. Welcome also from my side to our investor call. And let me start with the capital increase we recently conducted. So as Sebastian said, we are in the execution phase on our strategy. We successfully conducted the capital increase to finance further growth. We have an exciting M&A pipeline. So we decided to do that capital increase, even though additional debt load would have been possible as well. But considering the exciting M&A growth and keeping strategic flexibility, we conducted a capital increase. We saw strong demand, very strong demand. investors from Europe, but also from the US, and that shows that the equity story is convincing and investors are trusting in Dois and are continuously improving performance. Books were filled after a few minutes, the capital increase was several times oversubscribed, and it really was a successful event that made a lot of fun from a CFO perspective as well. Talking about execution, our Futurebit program is absolutely well on Just to remind you, we are intending here to achieve at least 50, 5-0 billion euros savings to 2026 compared to the 2024 baseline structural cost reduction savings we are talking about. We are absolutely well on track with a good pipeline, more than 50 million in terms of ideas, so we are expecting even an overachievement here of 10 or 20 percent in terms of savings, and that also applies to the current year, 2025. where we will end up more than 25 billion rather towards 30 of the savings side. Measures are implemented, measures are on track, negotiations with the workstores have been successfully conducted. Around 180 people already left the company. So that is a good sign that it was a good example of a positive execution. Going a bit more to the details of the figures, we see an increase in the order intake, 11.8% year over year. So that is basically driven due to the portfolio development. Book to bill ratio is around On the revenue side, even 15 million – sorry, 15% increase there. So, we see that application areas like construction and agriculture have a slight increase. That's, of course, also driven by the fact that we have the Daimler truck engines, which we acquired last year, which are mainly in those areas. So, the M&A activity is driving up revenue compared to the previous year. On the earnings side, cost savings are paying off. We are at 75.5 million or 5.0% adjusted EBIT margin year to date. We see that the third quarter was the strongest of the quarters and typically third quarter is driven by cyclicity rather than weak quarters, so that was very good and shows and proves that our portfolio matters but also our cost reduction matters are really paying off and that we see that continuously in our results. Talking about the different segments, covering here, firstly, the segment engines and services. So we see here order intake increasing, revenue increasing, and especially good signaling that the margin is increasing from 6.1% last year to 6.6% this year. We need to keep in mind that last year, beginning of the year, we still were in a stronger market situation with the three shift operations. So overall, we see that volume went down a bit, 8% compared to last year, production was 10%, but nevertheless we managed to increase the model, which is a very positive sign because it means that our measures, our strategic measures, our cost measures are overcompensating the negative economies of scale, residing from a weaker production due to weaker market conditions. Also, HJS, the initial after-approval producer, which we acquired beginning of the year, successfully managed to turn around, is profitable, is contributing positive EVIT as well. On the service side, revenue is year-to-date at $406.6 million. That is a 9.4% increase compared to last year. So even in the current market environment, we are continuously growing both organically, but especially, of course, also inorganically via the acquisitions we recently saw. Coming to the segment Deutz Solutions, we see overall an increase in the revenue. This is due to the fact that we acquired Blue Star Power Systems last year in August, but also the adjusted EBIT improved significantly. In order to understand the segment, the figures, we need to keep in mind that we combine the two business units with a different financial profile. On one end, we have the business unit energy. So especially Blue Star, Muggy Dolls are smaller entity in China as well. We see here the business is absolutely well on track. Order intake is on track. It's not totally like linear over the year, but it's absolutely on track. We just recently received another big order, which is not reflected in the figures yet. Also revenue is organically growing, a little bit offset by the US dollar. hidden in the footnote, but there is a purchase price allocation effect. If I take that out, my EBIT would even be at 18.8% or a margin level of 15%. So operationally, the margin is even better than what we showed you on the figures driven by that technical accounting purchase price allocation effect. On the business unit new technology, we are making progress as well. So new orders at 15 million, first time consolidating this Consolidating the product portfolio and good talks with customers, so we're expecting some increase going forward there, of course. The EBIT improved and still negative value driven by R&D expenses, but the run rate is getting better here as well. Coming to a few more KPIs, R&D spending. We had 4.3% of revenue, so that's a direct consequence improvement, that's a direct consequence of the future bit matters where R&D people are continuously getting out as part of the agreements we conducted with the Works Council. So that is showing a very positive trend here. Same for CapEx, we remain on a low CapEx level of 3.3%, more or less as of the year before. But of course we are also structurally targeting for continuously improved capex ratios, considering that the business profile of our group is changing towards less capex-intensive businesses. Working capital, we see a slight improvement there. We are at 19.9%. So 1.2 percentage points better than in the year before. We are not overdoing it on the inventory side here. We are pushing, but we are not overly pushing inventories down just to be prepared because we are convinced that the market and this engines part of our business is picking up at one point in time. And then we want to be prepared with all the restrictions on the supply chain. So that is why we are sitting on a 20%. we are working capital level. Talking about cashflow, operating cashflow improved as well. So also here good signals, direct development of a better cash generation capability, better operational performance. Also a lower increase in working capital compared to the increase you saw in the year before. That is positive on the free cash flow before M&A. We guide a mid-double-digit million-euro amount. That's absolutely on track here. We are, even though the Q3 is typically the weakest quarter in terms of cash flow due to summer breaks and so on, we are here at 2.4 million year-to-date, so that's a 31 million better development than the year before, also showing positive impacts of our transformation. And the debts likely increased among others due to the M&A financing. Last but not least, balance sheet that remains strong, 49% equity ratio and also solidly financed. Our leverage is at 1.4. That gives us sufficient headroom for the further M&A transactions we are working on. So only positive signals from the M&A. financial figures. With that, I hand over to Sebastian.

Yeah, thanks, Oliver, for the update on the financial part. Let me give you an update on the outlook of the rest of the year. So first of all, we confirm with a small specification, we confirm our guidance for 2025. So just to bear in mind what was our guidance or what has our guidance been so far, we provided so far a range between 2.1 and 2.3 billion euro revenue. We were always assuming a bit of an earlier recovery of the market in the first quarter, so that's not yet came in. So that's why we are specifying to arrive at roughly 2.1 million or at 2.1 million at the lower end of that guidance. The good thing is we confirmed the adjusted EBIT margin range as well. We confirmed here to arrive in the middle of that guidance range, and I think we've been showing clearly earlier that the path on profitability increases well on way, quarter by quarter, and we also confirmed the free cash flow prognosis with double digit million euro amount. As Oliver said, particularly the margin is supported strongly by our cost savings from FutureFit, by the service business, and of course by, you know, this ever-strong energy business as well as the portfolio. So we're showing that we're actually very well on track and quite happy with the progress here. We also currently do not foresee any sort of significant impact from the semiconductor crisis because that's one of the things we're pretty good at. bottleneck management when there are issues with supply chain. I mean, 22, 21, 22, we've been training quite hard on that, how to deal with difficulties in supply chain, particularly when it comes to semiconductors. All these activities which guided us back in the days well through these sort of problems is also helping us a lot so that we can actually say that there's no issue to be foreseen at this point in time. All right. With that, yeah, this is a confident outlook. outlook for the first quarter, and of course also for beyond, because I said it earlier when I talked about the outlook on revenue, it's true there is no tangible recovery in the engine demand in construction aggregate material handling. However, we are able to, or we have been able and will continue to be able to steadily increase our profitability from quarter to quarter, now the 5.8% in the third quarter. It's a preliminary high point, but we expect to arrive at a higher level in the fourth quarter as well. And that's, of course, due to the FutureFit program, as we just saw from Oliver, the savings, further savings to materialize in the coming quarters, 50 million. You know, we announced this 50 million a bit more than a year ago. We're very well on track, and that's an important thing, you know, we promise and we deliver the promises. And, of course, Deutz is now more than just an engine company. The engine remains to be important, but we manage, we guide this transformation towards a much, much broader business model quite successfully. And that's why we're now in a position that, despite still struggles in the former core markets, construction, agri and material handling, we're actually developing so well, particularly of course, due to the business unit service and energy, and in particular demand for gens that's extremely high and strong. So get started with Q4, that we can already say. I mean, we are at 6th of November, so we know already what's happening in the first month. So that's been very good and continues to support our expectation for Q4. Very strong last quarter of the year. Revenue growth, which we expect to happen in the fourth quarter compared to the third quarter, supported by the latest portfolio additions in defense and service as well. Margin increase I mentioned already, and our strategic transformation we continue to implement going forward. With that in mind, nine months in the books, three months to go. and thanks for your attention and obviously now as you know we are open for questions

Thank you so much for your presentation, Sebastian and Oliver. So we will now move over to the Q&A session. And to keep this conversation engaging, we kindly ask you to ask questions in person by the audio line. So to do so, just raise your virtual hand. And kindly note, if you are dialed in by phone, you cannot raise your hand. But I know Klaus Ringel would like to ask a question. And therefore, Mr. Ringel, I unmuted you. So you can now speak. Or not. Not. But that's fine. So we try again later. But in the meantime, we will move on with the first virtual hand we received from Stefan Augustin. So please go ahead. You have now the permission to unmute yourself, Mr. Augustin. So... It's too early for the technical equipment.

Can you hear me? Yes. Ah, great. Okay, that was a couple of buttons to press. So I would like to then dive already quickly into the Q4 projections. So I don't want to be really nitty-gritty, but we're looking for around $100 million in higher sales versus Q5. And could you help us a little bit of how much of these hundred millions we roughly look for would be the additions from Sobeck and the purchase service businesses? And where does in the fourth quarter then otherwise come the demand in the verticals from? So into what vertical do you sell some more engines? Who gets more interesting? So from that would be then the conclusion, can we keep this level going into 2026 roughly on the same level? So let's say, or is there a one time effect in sales in Q4? Stefan, thanks for the question.

So first of all, when I go through, let's say, the verticals, when I talk about verticals, I mean that sort of all business units. So obviously the business unit engines that will make quite a significant contribution. That fourth quarter, typically the fourth quarter is always a little stronger than the third quarter for two reasons. First of all, in the third quarter, we have that summer break, maybe in August, end of July, beginning of August. So that's why We're always lagging behind a little bit. And when it comes to the verticals within engines, it's pretty much across the three verticals, construction, agri and material handling. So there's nothing, there's no vertical which particularly stands out. Then, as you rightfully said, I mean, the service is developing quite nicely. We obviously track that on a monthly basis, so the last month has indicated that we're getting better month by month as well, and then the two acquisitions support as well. We don't disclose the very details of the acquisitions. They're sort of too small to provide exact million euro numbers for that, but obviously they add up as well. Energy business, Blue Star, is expected to be pitch stronger in the fourth quarter than in the third quarter as well. And then, of course, the most recent acquisition, Sovec, as well. But that's not like this. We don't talk about, like, you know, tens of millions. In short, it all adds up together. And that's how we arrived at that outlook for the fourth quarter. Sorry, I forgot your answer, and then of course you asked, which is sort of the $1 million question for 2026. We are currently putting the plans together for 2026, and the fourth quarter right now, I don't expect to be a one-off to make that clear. However, to be able to, you know, arrive at a guidance for 2026, that's too early.

Sure, I understand that one, but that was already giving me an idea. Second is then the larger order at energy that has been hinted. Is that something we should look for in the scope of something like between 5 to 10 million, or is that rather an annual big order of 20, 30, 40, or something like that? That would be the second question.

This order which Oliver hinted to is the first sort of let's say, the first third of the year order from our major customer in the United States. So it came expected because they don't order on a weekly or monthly basis. They order, let's say, three times per year, two times per year. And I believe Oliver talked about something… 20 to 30 million.

20 to 30 million, yes. All right, that's quite some scope here then. All right, and lastly, maybe on the tax rate in the third quarter, this has been a bit unusually high, but is this something that has to do with the structural changes where we generate the profits or is it rather a one-time effect?

No, there are typical one-time effects. Overall, the tax rate on a group level is at around 17%. That is mainly, in general, that's mainly driven because we have a significant amount of tax loss carried forward from the past, from the 1990s, basically, but we are benefiting from that still. and so that in Germany itself, we are rather on 11% minimum taxation, so there are no structural changes to that, and the tax laws carry forward. It's going to last some years in the future still.

All right. Thank you very much, then.

Thank you very much, Mr. Augustin, for your questions. So Mr. Ringel was a bit surprised that I unmuted him, but he sent me his questions. So I'm happy to ask the questions for him. So his first question is, is the adjusted EBIT margin level now achieved a sustainable cruise level that can be assumed going forward?

Well, we want to improve it further. So, I mean, very clearly we want to get better. And, you know, obviously with the current structure of the company, with the current demand in engines, you may consider that as a cruise level. But we are not up for cruising. We're up for speed. So that's why, obviously, you know, with the further expectation in market recovery in the next year in the engines business and further growth in the verticals, which we entered into, yeah, we want to clearly depart from that cruise level towards a bit of more of a full throttle way of traveling.

All right. I have two further questions, but ladies and gentlemen, please be reminded it's still possible to raise your hand. And the second question is, what is your view on the expected recovery of the markets in the coming months? Also with regards to the German infrastructure package.

Yeah, I mean, that's what I tried to say earlier when When Stefan asked a similar question, we don't see it in the incoming orders as you saw here in our numbers yet. We're still like, you know, book to build around a slightly above one. But we will see. We cannot say yet. That brings me back to what you just said before. It's good to have such a high cruise level now on this low occupation in the engine business. the good news is obviously we're bringing also some new products into the market we're bringing the 3.9 liter engines into the market the demand from our customers is quite strong so one thing is you know is how is the general market developing in the engine business and that's again the one million dollar question for next year we do expect a recovery but everyone expects a recovery but it's just not materializing However, we're working also quite strongly on winning market share with the new products that we bring into the market. 3.9, as I just mentioned, but also the 24-liter engine in energy and utilizing also our JV and partner engines from Asia in particular. So we're actually quite positive looking forward.

All right. And his last question is, when will you be in a position to carry out larger M&A transactions again? Will the focus remain on the energy sector or are they currently concentrating in particular on the defense tech sector?

Both verticals are extremely interesting for us and you will understand that there's not much more to say in a public earnings call on M&A strategy but both energy and defense are very interesting verticals and we are observing and pursuing a lot of different avenues. But as we have shown very clearly in the last two and a half, three years, if we do M&A, we want to do it very successfully. And I think the acquisition of Bluestar and the Diamond Truck Engine business and all the others have shown that they're actually pretty good at it now. So that's why we're very picky. And we will only do the things which make a lot of sense. But in order to arrive there, you need to follow lots of opportunities. But we're pretty confident that we continue to work on that track.

All right. Thank you so much. So and then we have the next question or based virtual hand from Klaus Zöhr. So you should be able to unmute yourself, Mr. Zöhr. Okay, then in the meantime, we will move on with Mr. Jansen. So same for you, Mr. Jansen. I have given you the permission to turn on your microphone, and now we have both microphones open. Then, Mr. Jansen, please, we just take your questions after the one from Mr. Zerf.

Okay, good morning. Just one question regarding Arx Robotics. You spoke about the investment round. Just for clarification, you don't plan to have a major stake afterwards, right? Because there are so many other investors and with Sobeck you already had a big investment in the defense market, right?

Yeah, that's correct. I mean, we plan to participate in an investment round, but that would not turn us into a major investor. That's absolutely correct. This is an investment which is rather underlining our ambition or our strategic partnership, but we do not plan to take over or anything like that.

And is there an indication on how big the round overall could be?

Of course, there is an indication, but that's in the court of ARX Robotics. You will understand that I cannot and do not want to comment on an investment round of another company.

Okay, no worries. Thank you very much.

Thank you very much for your questions. And now, Mr. Zahra, I'm not sure if you're able to speak. I hope so. Oh, great. Then we're happy to take your questions.

Oh, thank you very much. I'm just coming back to the announcement that you are introducing the large 24-liter engine into the market. Could you be a bit more specific what your expectation is in terms of sales or market entry in 26? Is this material or...

small size big size units any any indication what type of impact this might have yeah first of all we don't talk about huge unit sizes here um because it doesn't go into sort of serial mobile equipment such as let's say material handling where you know sometimes we sell five six seven thousand engines to one customer a year But we also talk about a significantly larger engine. So the unit price is a multiple of the unit of the average unit price of what we typically bring into the market. So we do not talk about thousands per year. We talk about after the wrap up, probably hundreds per year, at least in the next year. But from a revenue and especially also from a profitability point of view, there's sort of a rule of thumb in the engine business. the larger the engine, the more the financial attractiveness as well.

Okay, thank you. And if I may add one question on ARCS. In your statements and in the presentation, it always says you intend to participate. Is there still an open question if you participate in the financing round?

No, we have decided to participate, but this is a cautiously, legally checked wording, because we are one party to participate, and as a financing round, there are also other parties to participate. And typically, you know, in these sort of investment rounds, the financing round is concluded when every investor who wants to participate signs sort of the legal agreements. And that's currently, as far as I understand, being negotiated with many investors. So it's more like a process point of view. So that's why we have this. this very cautious statement, but we are very committed to do so because we are very convinced of the outlook of the company and also of the areas of cooperation between ARCS and Deutz. It's an amazing opportunity where Deutz can bring the industrialization expertise, scaling expertise, management of supply chain expertise to the fantastic technology expertise coming from this DevTech company. Okay, thank you.

Thank you so much, Mr. Zerr. And then we have a follow-up question from Mr. Augustine, so please ask your question.

Yes, thank you. Just two smaller ones. I recall that you mentioned you had a new customer with comparatively higher amounts of unit volumes. Can you just remind me if there is the expectation that this customer should ramp up the business in 26 or will that be a bit later? And the other one would be when do you expect the LOIs of UMS to materialize into orders? Is that also expected maybe for the year end already or rather going into 26?

Yeah, for the first question, that larger, I believe you referred to the larger order for our 3.9 engine in construction. And, yeah, for confidentiality reasons, we were still not allowed by the customer to announce who it is, but it's a very relevant construction equipment company, the ramp-up is expected to kick in in 2027, not in 2026, so that's following the ramp-up of their respective products. With UMS, we expect first orders, or we are already gaining orders, but first larger orders potentially to be to kick in in 26 already. We're still at the sort of smaller pre-series orders right now, but we believe we're having very promising conversations, also particularly in the field of multinational construction equipment companies. And I'm pretty hopeful or pretty positive on good developments in use already early 26. All right. Thank you very much.

Thank you very much, Mr. Augustin. And in the meantime, we did not receive any further questions. So I see no further virtual hands. And that means we will come to the end of today's training call. And thank you very much for attending and for showing interest in the DOITS AG. And also a big thank you to you, Sebastian and Oliver. We appreciate the time you took and for guiding us through your presentation and for answering all the questions. So, yeah, from my side, I wish you all a lovely remaining week. All the best for you for the remaining quarter. And Sebastian, I have some final remarks from your side.

Yeah, thank you very much also from my side. Again, still in some areas, difficult market environment, but we're doing well. Transformation is on track and all the results clearly show that this is the case. We're looking forward to be in touch with all of you in the next touch points. Financial calendar is very clear. 2025 annual results, end of March. Q1, May 7th, and so on and so forth. But on the road to there, we'll be around at many conferences and hosting a couple of roadshows. So looking forward to being in touch with all of you. And thanks for your interest, for your confidence in Deutz. And, yeah, we're happy to continue rocking this thing here. Thank you.