Durr Ag Spon Adr

Ladies and gentlemen, welcome to the Dura Conference call for the preliminary figures for the third half of 2025, followed by a Q&A session. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Matthias Christen. Please go ahead.

Thank you very much. Welcome, ladies and gentlemen.

This is Matthias Christen from DUR-AG's investor relations team. Thanks a lot for joining us. The short notice of the last night's talk announcement, technical advice, the presentation slides of today can be found on our website, and we assume that you have it in front of you. Please note that this call replaces the call announced for the publication of our Q2 results, so there will be no further call on August 7. As usual, the call will be hosted by our CEO, Jochen Weihrauch, who is joining us from a business trip to China today, and of course by our CFO Dietmar Heinrich, who is with me. After the statements performed by Jochen and Dietmar, we will be happy to answer your questions. Now I hand over to Jochen. Please go ahead.

Thank you, Matthias. Good afternoon, ladies and gentlemen. Also a warm welcome from my side today out of Shanghai. Following our announcement yesterday, it is important to us to get in touch with you as soon as possible. Let's start on page three of the presentation. Looking at the second quarter, there are a few things to note. First, I'm sure you're well aware of the geopolitical environment and its implications. The fragile environment in trade policies caused significant investment uncertainty. As a result, we record it weak order intake in Q2. Furthermore, we have also observed a much slower than expected development in the e-mobility segment. Again, this is partially due to political reasons, as for example, subsidies in Germany had expired at the end of 2023. Whilst we see the long-term trend regarding e-mobility being intact, the momentum currently slows down. This is affecting our automation business and was an important factor for the non-cash impairment announced yesterday. Despite the political headwinds, we are consequently pushing ahead with turning DUR into a lean, sustainable automation group. The successful sale of our environmental technology business marks an important milestone in that regard. It also leads to a significant book gain, which we'll use to further transform the company as we enter into the next phase of our transformation process. As indicated at the end of June, we have now defined the framework for the reorganization of our administrative functions. As a result of all those developments, we see different effects on our full year outlook. We adjust our forecast for the order intake, However, as the various extraordinary effects related to the admin cuts, the impairment, and the book gain compensate each other, at the same time, we confirm our guidance for the EBIT margin before extraordinary effects and our net income 2025. Now, Dietmar will walk you through the numbers, starting on page five.

Thank you, Jochen, and hello, good morning, or good

Afternoon, ladies and gentlemen. Moving to slide number five, you can see the impact of yesterday's announcement on our guidance. Please note that all figures relate to the continued business and that the earning figures of the continued operations are burdened by negative allocation effects which would normally be attributable to the discontinued environmental technology business. In the first half of the year, these allocation effects in EBIT before Extraordinaries amounted to 6 million euros. Due to the macroeconomic environment, we had to adjust our outlook for order intake. The so-called Liberation Day on April 2nd created massive uncertainty, which prompted customers to adopt a wait-and-see attitude. This affected order intake. However, most pipeline projects have only been postponed, but not cancelled. Despite somewhat softer revenues, we are confident that we will achieve our forecasted range, even if it will be at the lower end of the range of €4.6 to €4.6 billion. Nevertheless, we confer the outlook for the EBIT margin before Extraordinaries and Net Income, as we expect a high book gain of €160 to €190 million after tax from the Environmental Technology Deal, compensating the extraordinary expense of 40 to 50 million euros for the admin adjustment and the impairment, which will be in the range of 110 to 130 million euros. As the impairment has not been booked yet, we cannot state net income in the EBIT margin after extraordinary for the first half of the year today. These figures will be published as scheduled on August 7th. The guidance for the EBIT margin before extraordinary effects remains unchanged at 4.5 to 5.5%. The guidance for the EBIT margin after extraordinary effects had to be adjusted to minus 1 to 0% as the book game is not considered within the continued operations. So let's jump to page 6, which I will only want to have briefly. The graph shows that Q2 was really an exceptional quarter. €800 million order intake is in no way normal by the result of the uncertainty after the tariff announcement in April. Please also note that last year Q2 and especially Q1 were boosted by several very large orders, so we also have a strong base effect to consider. Page 7 shows the sequential sales development. Some delays in the execution of large automotive projects had an impact on year-to-year sales. However, this has nothing to do with the uncertain macro environment. Moreover, sales were affected by low orders on hand in woodworking and industrial isolation. Nonetheless, we are confident to catch up in the second half and reach the lower end of our guided range. Page 8 shows that despite stable sales, we were able to improve the EBIT margin before extraordinary in Q2 versus Q1. This was mainly due to remarkable gross margin improvements in the equipment business, reflecting our successful value before volume strategy. The profitability in the equipment business helped to compensate for the slide in our medicine service business as customers cut service spending in order to protect their margins given the unsecure environment. Another highlight shown on page 9 is the strong free cash flow in Q2 benefiting from appreciable prepayments and low contract assets.

This is a proof point that we are able to collect cash even during tough times. Let's have a short overview on the division starting with page 10.

Auto intake in automotive was 100 million euros lower in Q2 than in Q1. We managed to secure some larger projects, for example in Southern Europe. Auto intake for smaller conversion jobs during our customer summer shutdowns was weaker than usual, reflected in user spending behavior. But these conversions have only been shelved, but not completely disappeared. Automotive's EBIT margin was very strong in Q2 and surpassed the 7% mark already achieved in year-to-date. With this, let's move on to industrial automation. The figures for industrial automation on page 11 are somewhat weaker than last year. However, we need to differentiate. The main tech automation business has been developing well in terms of order intake, a case-balancing technology business is also on track. On the other hand, auto-engineering and automotive technology for the automotive powertrain sector remains moderate due to the slow progress of immobility. Moreover, battery business is struggling with a difficult mobile tech environment. Please also note that the gap between this year and last year is partly caused by the deconsolidation of Agranko in mid-2013.

million in sales and above average earnings.

The division wood working as shown on page 12 is still operating in a difficult market environment and the additional fragility caused by Q2's trade policies did certainly not help to promote confidence. Order intake and sales almost matched last year's levels and the margin has clearly improved thanks to last year's cost cutting. A further positive aspect is that business with the wooden houses industry continues to pick up, with more large-scale projects being planned again. Furniture-related business is still subdued, even though our customers indicate an increasing modernization need. Summarizing the figures, you can see then on page 12, no, page 13, sorry, a complete overview of the artwork. All items that we have adjusted are marked in blue. As we already touched the guidance at the beginning, I would like to point out that the revised outlook for the divisions will be published in conjunction with the final H1 numbers on August 7. Now let's move on to the next page, page 14, to explain the impairment that will be included in our H1 figures. The impairment relates to our business unit production automation system, which is part of the industrial automation division. The attributable goodwill is around 240 million euros. The impairment will roughly cover half of this. The reason for the impairment mainly lies in the much slower than expected development in the e-mobility segment. The long-term trend continues to be intact, but they remain to slow down substantially. However, we remain convinced that automation will become even more important in the future. This is due to labor scarcity, reshoring, and increasing volume and quality demands for many products manufactured on our machines. And regarding immobility, our customers remain convinced of its huge potential. This makes us confident to benefit from higher capex spending in the foreseeable future, and this is one reason why we invested in this business. I would also like to highlight that our automation business goes far beyond supplying the automotive industry. Especially the Maytag sector is highly attractive. Order intake in this business is growing nicely, as we have been able to position ourselves as a global partner for Maytag production lines a strategy that is well received by many large medical corporations. And with this being said, I would like to hand over to Jochen again. Thank you, Dietmar. We would now like to comment on the execution of our sustainable automation strategy and on why we see ourselves well prepared for the next economic upswing. In early June 2024, we presented our plan to simplify our group structure and implement the sustainable automation strategy. The concrete targets can be seen on page 16. Focusing on the core business with automation as our lead technology. Reduce the number of divisions from five to three. Become leaner and more agile in our cooperation. And reduce the debt leverage around one or below using the proceeds from an active portfolio management. One year later, we can confirm that we delivered what we announced. Let's have a look at the next slide. The most ambitious step of our sustainable automation transformation was the sale of the environmental technology business. Despite an adverse M&A environment, we were able to sell the business based on an enterprise value of 385 million euros. Moreover, we expect a high book gain of 160 to 190 million euros after tax. The definite amount will be fixed according to the valuation details on the closing date. Going to the next slide. With the environmental technology sale, we will reach our transformation target of a new structure with three instead of five divisions. As you may recall, at the end of last year, we also integrated the former two automotive divisions into one powerful division. The continuing activities that are forming the Reshape Duo Group are serving different markets that have only one joint purpose. They are all automating production processes and help customers to produce in a sustainable manner. This is why we call it sustainable automation. Moreover, our group becomes leaner and we can spend full management attention on the core business. This goes in line with the more entrepreneurial governance in the group. The division management teams will have more leeway to take business-specific decisions and to reach their targets. This will promote agility and further reduce complexities. But with the new divisional structure, we are not at the end of the journey, as we will show on the next slide. Our adjustment of the group structure also resulted in a sales reduction of around 10%. Consequently, we have reviewed our administrative structures to adapt them to the new company size and at the same time make it more efficient. After our review, in the next step, we will take action and cut some 500 admin jobs until the end of 2026. This measure also reflects the new governance structure with more entrepreneurial leeway for the three divisions. And it allows for better cost structure and is an effective contribution to self-help given the economic and geopolitical uncertainties. We expect annual savings of around 50 million euros This will become fully effective by 2027 with part of the savings already materializing earlier. The extraordinary expense for the measures will amount to between 40 and 50 million euros and will be booked in H2. As mentioned, this expense as well as the impairment loss in Q2 will be offset by the book gains from environmental technology. Let's move on. The adjustment of the group administrative structure is another milestone in our transformation process, which has been going on for around one year now. All actions that we took had one goal, align DUR under the motto of sustainable automation. Apart from the measures I have just outlined, we delivered further milestones, such as the sale of our gram coal, the consolidation of the automotive business, a lean organization and reduced fixed costs at HOMAC, already improving results year-to-date at lower revenues, and the integration of our automation activities. After all these measures, we are confident that you are well equipped to tackle the coming months and years. Let me now on the next slide provide our view on the coming months. All the measures presented strengthen our resilience and put us in a good position to benefit from the next upstream. We cannot change the toxic uncertainty created by trade policies, but we're doing our homework, and we'll be well prepared when our markets will pick up again. Another motive. We still see a solid order pipeline as customer projects have only been postponed, but not canceled. Modernization pressure continues to be high as many paint jobs are outdated with deficits in terms of productivity and energy efficiency. And our new setup with one unified automotive division has made us even more robust. In industrial automation, There's plenty of upside potential for our e-mobility business. This will materialize with rising consumer confidence, a more reliable regulatory environment, and the availability of more affordable e-car models. Moreover, I want to point out the good development in the MECTOC business and Schenck's balancing technology. HOMAG lowered its fixed cost base by 50 million euros and widened its technological lead, as could be clearly seen on the Ligna trade fair. We see the construction market picking up, with more large projects in the wooden house sector being set. In this business, HOMAG has the opportunity to return on its growth path interrupted in 2022 and differentiate itself as the number one partner for the industrialized production of housing modules. Based on that, I want to summarize the next slide. Despite the uncertain macro environment, we continue to implement our sustainable automation strategy to inform into a clearly focused automation group. We proactively adopted short-term measures against the situation in core markets, such as and spending cuts. On top, we announced we are creating leaner, with complex processes and structures, and are striving for sustainable cost savings of 50 million euros per year. Based on this and the optimization measures implemented in the last two years, we are well prepared to benefit from an improved market environment. Finally, we stick to our earnings guidance for 2025 and will continue to put full emphasis on profitability. Thank you very much.

Now we're looking forward to your questions.

Ladies and gentlemen, if you would like to ask a question, please press 9 and the star key on your telephone keypad. In case you wish to cancel your question, press 3 and the star key. Please press 9 and the star key now to state your question. And the first question goes to Nikita Lal of Deutsche Bank. Please go ahead.

Hi, thanks for taking my question. First of all, thank you for all the details you gave us on the ad hoc. I think it's really helpful for the market to understand what the issues were in Q2. Two questions. First, on industrial automation, you mentioned that the low sales is a consequence of the low order intake in 2024. The order intake in 2025 is even lower year-to-date. Can we expect to see ongoing weak business here in the foreseeable future? And related to that, how do you intend to change the situation? What can you do to improve the situation in industrial automation and protect the margin? And the second question is on the proceeds from the sale of the environmental business. Are there any plans for the proceeds, or are you just using it for the leveraging? Thank you.

Thank you, Nikita, for your questions. First on industrial automation, all right. 2025 was lower even than 2024. We've seen especially industrial automation EQ2, which was very weak at our, you know, the BDS business being at around 60 million. But what we're already seeing in July is that some of the delayed larger orders are kicking in. So that will be pretty good month. Is that already the turn? Don't know because there is still some uncertainty, but I'm quite confident that that order will pick up definitely better than Q2. And yeah, your question in terms of improving, we cannot change the environment. But what we are constantly doing, and this is actually why I'm also in China right now, I spent my full week on industrial automation, seeing customers, understanding. And I see potential on the one hand, also from projects. On the other hand, we're also working on the bottom line. We have fully integrated the group as of June under one identity. We are bringing entities together, like we have been merging two companies here in China. We've reduced significant capacity in Germany. We are bringing the sales teams together. We're pushing, as we were mentioning, the areas that we have currently more in our hands, like the medtech business, and that will be paying off. The immobility side will remain challenging for a little while, but you will definitely see improved earnings in the second half of the year for that business. For the proceeds from the sale of the environmental business, so far we're using the proceeds to get our EPGA leverage below one, which gives us good comfort on the balance sheet. We're not planning any significant M&A activity in the short future. It's more, as we had announced, to further improve the efficiency of the group. And then whenever there is a but rather smaller, maximum midsize M&A opportunities, I'm not ruling it out, but that's currently not the focus.

Thank you. Thank you.

And the next question goes to Sven Beyer of UBS. Please go ahead.

Yeah, thanks for the call and thanks for taking my questions. There's a few. First one is on the order guidance, the new one. So if I understood you correctly, Q2 orders should be the trough and we should already see an improvement sequentially. And I was also wondering about the pricing environment that you currently see. Obviously, I guess in such a tough market, it's not so easy to achieve your value strategy. But, yeah, curious on your thoughts. That's the first one. Thank you.

Thank you, Sven. Good question. Yeah, Q2 was, as Dietmar mentioned, exceptionally weak. We have seen Many projects are slipping and I was just mentioning for industrial automation At least we have a few good examples in July where we could already book orders that were foreseen earlier Again, there's still a disclaimer to it. We'll have to see how things continue in terms of the pricing What we currently see, there is not really a significant effect. If we look especially at our equipment margins, they remain very good. Here and there, we have to negotiate. It's sometimes more about payment terms than pricing. But, of course, pricing is always there and will always be there, especially in automotive. But I don't see it. And we are also, you know, following our continue to follow our value before volume strategy. So I don't expect significant margin erosion on the order intake.

And going to what Dietmar said, just in terms of pipeline, that most of the orders have been postponed, but does it mean that some orders have also been canceled in the pipeline at least?

There is, first of all, just to be clear, we don't see cancellations in the order book. So we're talking about the pipeline. And in the pipeline, yes, there is sometimes and more so now projects that disappear in a certain region. They might show up in another region. Some are popping up again. So there is more dynamics. And in some cases, yes, there is the project that are put on hold and some even for the time being stalled. But again, especially also on the automotive side, we've had an exceptional last year, but it is not that we are not seeing a pipeline. Actually, yeah, I would say solid is still a good way to phrase it.

And then on the industrial automation business, the goodwill impairment that you did, is that everything entirely market related or have you also found some, you know, maybe internal execution issues in BBS business after the closing of the deal?

The impairment is purely market driven. We have in the first year after acquisition, we've had a couple of projects that I would call it needed special attention. And some of them have probably not turned out as good as we would have expected. But this is what we, that was the work basically of the first 12 months. So we currently don't see, you know, projects which, you know, all the projects that are now booked anyways are projects that have been booked under our ownership now. That's not the trigger. The trigger really is the market side and consequently order intake, which in the end, of course, has led in some cases to under-absorption, which we have to a large extent compensated by capacity reduction. But the driver for the impairment is that we had to adjust basically the business case from a top line perspective going forward. And this then from the model with a higher beta factor in the distance also now led to the impairment which we have specified.

The final question for me, if I may, from the EBIT margin guidance. Here you have not qualified it any further, the adjusted one. So should we take that all ends of that guidance are still possible and then also a technical question because you mentioned those six million allocation effects will they go then away in the second half and actually help you to achieve the guidance or how do I need to get this technically thanks I think that's a good one for Dietmar

Therefore, of course, the market is a little bit under pressure based on the reused sales. Nevertheless, we expect it for execution the second half of the year. I think it's too early to really say what's happening right now and to pursue that within the guidance range. So let's move on with the midpoint. Secondly, regarding the allocation effect, at that point in time, When the closing is being done, we will charge this then in conjunction with the transitional service being executed over a period of roughly a year, then to the independent entity and accordingly the expense on our side that are today recorded in the continued operation will then be, will actually disappear.

So is it that you don't have the 6 million anymore, but do you also get the negative 6 million back from the first half or is that going to stay?

No, no, no, no, this will remain. So for the last year, the total number was 17 million euros. We expect actually a similar number for the complete year this year, which means that we will have actually, yeah, A push out of around 3 to 4 million euros for the last two months and then for the next year.

Understood. Thank you both. Thank you.

And the next question goes to Philippe Laurent of Bernstein. Please go ahead.

Yes, thanks for taking my question. I just wanted to ask very briefly, again, whether I've understood correctly, but the goodwill impairment is related to BBS automation or is it related to the team technique group? That's the first, and then I follow up with a couple more.

Yes, thanks, Philippe, for the question. Team technique, to say it quite blunt, doesn't exist anymore. This is part of the BBS group. And consequently, in technical terms, it's part of the cash generating unit we are now talking about.

Okay. So, yeah, there's no difference. Okay. Then the second one was to follow up a little bit on what you said on the order intake pipeline, basically, and that actually still remains solid and that you saw here and there like a few more orders coming in July, but you're not quite certain. about reaching a turning point. I was wondering whether maybe you would go as far as saying that there's going to be at the later stage the materialization of pent-up demand because all the orders that did not come in Q2 and maybe won't come through the remainder of the year will come maybe next year also. How do you see that right now?

Yeah, that's a good question, which, you know, let me try to answer it as follows. Yes, we see a lot of projects that are delayed. Some of them definitely would have been booked if the world would be clearer. And consequently, I assume that there will be some demand. When it will be kicking in and how strongly we will have to see. I mean, if you chose to use a different division, woodworking, I mean, on the one hand, and that's good to see, that we have significantly improved profitability on a low sales level, but we don't see real pickup in the market. And, well, we would say immediately there is too many projects right now that are just deferred so it's a bit different by business and yes there is an element that we will see more orders coming once the world hopefully is a bit clearer how strong that will be and when it will kick in very difficult to say at the moment yeah I understand and then I have two more questions so the first one is also like probably a bit more of a housekeeping one

You mentioned that you want to cut around 500 admin jobs. I was wondering how many admin jobs you had, like at the end of last year, how many you had in the still existing group structure, so maybe just the continued operation at this stage, or by how much do you cut into that? And also, what are the thoughts you've given to any risk to the integrity of the still existing group structure as well? Because sometimes companies tend to cut a little bit too much into these functions, and then there are negative surprises down the road.

Yeah. The 500 jobs, let me answer the question indirectly, is somewhere between 15% to 20% of our admin community, if I may call it like this. So from that you can guess a rough number. You know, is it too much or not enough? This is always the debate you have in processes like this. We have been going through a very intense exercise internally that makes us believe that we have found the right amount. Yes, we want to significantly reduce costs. On the other hand, of course, we don't want to jeopardize our business. And we consequently believe that this is the right right-sighted.

The 16 to 20% of the admin community is for the continued operations, no? Yeah. Yeah, okay. Perfect. Perfect. And then, like, final question, maybe also one that you might elaborate on, is basically you mentioned immobility is a bit weak, especially in the automation business. Are you doing, like, especially with regard to your strategy, you know, of simplifying the group structure and so on, Are you giving, like, any thoughts to this kind of activity since it's been quite established and maybe there's not that much market focus or customer focus on that in the future?

What do you mean by, Philippe, by customer focus? You mean from your own organization?

Yeah, I'm saying, like, worldwide we are speaking a bit less about ESG topics right now. especially with the positioning in the U.S. and all these kind of things. So perhaps this is not going to be like such a big priority for your customers, let's say, as it was like two years ago.

I mean, some of the customers definitely are rethinking their approaches. I mean, you can read it in press in Europe and Germany that the, the struggle some of the OEMs, basically all of them now have, if they're not just pure EV anyways, that the transformation from the internal combustion engine to pure electric is happening now slower, which consequently means for some of the OEMs that they have to renew in parallel to their immobility strategy still the internal combustion engine model. So they have currently double spending, which of course creates scarcity on CapEx. And that all is creating a difficult time. Plus, we do business with the Tier 1s and the OEMs. There is a transformation from a lot of business from the Tier 1s to the OEMs, and this all still has to sort out. a pretty good market insight, obviously, through the existing BBS organization when it comes to their traditional business, especially on the tier one side. And, and this is, of course, one of the synergy fields that we have addressed, that we're using the very strong dual sales network, including sometimes even myself, to promote, especially with the OEMs, our products. So I believe there is a lot of attention, it is simply that the market is sluggish at the moment, and we've also partially addressed that in the comment, in our battery business, so the electrode holding business, I mean, if you look at what's happening in Europe, for example, to some of the battery manufacturers, also it is a period of, I would say, consolidation and re-definition of the strategy. So we're well positioned. We're also further developing our dry coating technology. But of course, we will have to have the customer base in Europe and North America. Asia is a different animal. Sorry for the long answer.

Okay. Thank you. I'm back in the queue.

Thank you, Philipp.

And the next question goes to Peter Ruten-Eicher of Baader Bank AG. Please go ahead. Yes, hello, gentlemen. Firstly, another question on automation. So now you have, in particular in e-mobility business, a much bigger slump than initially expected. Does this mean that you have to restructure, to reduce capacities, to a bigger extent than planned so far, and do you think that there might be here higher one-offs for restructuring than initially expected?

Thank you, Peter. We have already significantly reduced capacities as we go. For example, in Germany, only actually in our location near It's more than 200 people that we've taken out since the acquisition and also in some other places. So our assumption is that we've done basically by far most of the work. There might be adaptations and reductions here and there, but we don't see that being a significant amount, at least an amount worthwhile talking about in this round or an amount that would create kind of, you know, an extra accrual beyond, you know, normal business. So we've done a lot already and a little bit probably still to come, but in the course of the normal business and then, of course, we assume that at some point the business comes back. but the capacities are not much above what we need.

Okay, another question regarding the overheads for the environmental technology business, which you're so with. One of the arguments for the reduction in administration work that your group is now leaner. So do you expect that the buyer of the environmental technology business will take less of your overhead services than in the past? So what is your view and to what extent is the reduction in the administration workforce related to this?

Yeah, it's a good question. There is some can be assured that proportionally the buyer would take over the same amount of people. Probably not. This is also why we've announced one reason being that we will lose about 10% of turnover with the sale and consequently have to adjust. So some piece of the number I've just mentioned can be attributed to this. And another piece of this is consequently to reduce costs also proportionally. within the ongoing or continued operation.

Okay. Then regarding the sale of the environmental technology business, you have taken over a 25% share in this business. Does there exist a put option and what are your plans with this 25% share?

Yeah. It is For transactions of that type in private equity, it's quite usual that there is a reinvestment from the seller, so this is why we've agreed an amount which we believe is absolutely fine. For us, what makes us comfortable is, of course, it is a private equity investor, and not too much referring to the details of the the agreement, but of course, us being the majority, the minority partner in that business, there is the typical structure of tag along, drag along. So, whenever the private equity firm exits, we will exit alongside.

Okay. And my last question is on your medium-term guidance. So you're still out with a guidance of around 6 billion euros saved by 2030 and at least 8% adjusted EBIT margin. In the past you said probably you will be able to achieve this in 2027. What is your view on these targets now with let's say, much weaker 2025 than expected and persisting uncertainties.

Yeah. In a, you know, what we always call the mid-cycle market, the profitability target continues to be there. On the precise sales number after the divestiture of the business at this point, we would not give a statement. So, This would be something, you know, once the situation is clearer and probably a bit of a feeling when we come out with the guidance for 2026.

Okay, but the 8% adjusted EBIT margin is still present.

Yeah, if you look at the business that we run, absolutely, because automotive has proven that they can do it as a combination, and there is still synergies there. HOMAC, we have described, we are at more than 5% in a very low cycle point, so 8 to 10, and we said the target is at some point which 10% is feasible, and now we need to do the homework. to some extent, in industrial automation and wait for the market to come back. So if you add that all together, this is what makes us confident that the target remains in place.

Okay. Thank you.

And the next question goes to Claudia Moczek of Bietigheimer Zeitung. Please go ahead.

Thank you. Half of the job cuts are planned in Germany. How many jobs will be cut in Binnikheim? Do you know that?

Thanks for the question. We cannot specify exactly at this point. So we said around half, as you said, will be in Germany. And we still have to specify the cost. We have to first synchronize with the employee representatives before we can come up with any idea which location will be affected by which amount.

And redundancies planned for operational reasons?

The redundancies that we're currently planning are driven as we had explained by the company shrinking by about 10% But at the same time, we're also looking at the current market environment. We want to make the company more resilient and more efficient.

Thank you.

Thank you.

Ladies and gentlemen, at the moment, there seems to be no further questions. We'll leave the phone line open for a moment. So if you want to ask another question, please press 9 at the start, you know.

Okay, and we have another question.

It goes to Adrian Pail of AutoBH FSE.

Please go ahead. Yes, hi. Thanks for having me. Actually, coming back again on low intake, obviously a very important topic. I understood that you said there are quite some push-outs on customer projects on one hand. On the other hand, I was just curious to hear again a couple of thoughts on the auto, because it seems like that, let's say, the quarter is from, what is it, 200, 250 million euros of intake, but you're taking down the guidance a little more. I mean, you referred already to, I guess, probably some automotive projects that are pushing out to the right, but on the other hand, what is it what clients are telling you? What would they need, actually, to, let's say, unwind this uncertainty In the second half, is it more kind of something specific on how the geopolitical situation is going, or is it something different? And including what we have been discussing in Germany, i.e., the Investitionsbooster, it seems that, you know, there's nothing that makes you more confident on getting additional business in the second half from this, or am I wrong here? And a third question related to the orders is on the phasing. I mean, you referred to industrial automation already to some degree, that July has been obviously better. But I was wondering in general how the second quarter was in terms of phasing per month. when we look at the order intake. So has it been better in June already or is that not necessarily been, you know, something that you would highlight? And then I might have a follow-up on the restructuring. Thank you.

Yeah. Thank you, Adrian, for your question. Starting with the, you know, how the look by month. To look by an individual month in our business doesn't really help because, you know, things move back and forth. Why did I highlight July? Because, fortunately, in industrial automation, we have seen at some examples that some of the orders that we're pushing out have kicked in now in July, which will make it a good month. This is why, you know, when it was asked earlier on this call, is this a turning point or not, we will have to see. I don't see that everything will be bright from today on. So we will have to see how things develop. But what I can already assume is that third quarter will be better than the second quarter, which at least is an okay message for us. The order intake in general and what would need to happen is, I can only refer to the discussions I have, especially with the large OEMs, who cannot calculate currently their profitability because, you know, do they have to assume 50% when they ship a car from Europe in the future to the U.S.? ? Do they have to calculate 15 or even 100%? And that, of course, makes them nervous. And at the same time, if they then say, okay, if I think about the scenario of high tariff and consequently I have to invest in U.S., it will take at least two rather than three years after I have taken the decision that the first car will be produced locally. And then they are not even sure whether they will have the labor available in the U.S. because, as you all know, the U.S. loses a lot of operation labor, as we speak. So this is the sort of uncertainty that basically hinders any real decision making. How quickly it certainly will come back, hard to say. As we all know, there was a deadline given of August 1st. Will this deadline, August 1st, really be there? And we will all know what's going to happen. Will the EU come to an agreement or not? Will everything change again in September? This is very difficult to say right now. This is where, from the pipeline and the bookings that we had in the first half, we said it is, from the current point of view, and if we look into the project pipeline and give it a realistic probability, we decided that the guidance that we had given before is very unlikely. But if you talk to our division management of the different divisions, the spread of what could happen during the course of the year is bigger than it has ever been. I know this is not a very precise answer to your question, but that's as good as I can give it at the moment.

No, that's fair. I mean, no one has the crystal ball at the moment, maybe Mr. Trump, I don't know. And then maybe one thought on the investitions booster would be helpful, but another question, a last one that I had, was on the restructuring. I mean, I see that on the holding side the headcount is now below 900. Not quite sure if you want to raise a target for holding in terms of headcount and how much of the job cuts that you have announced is going in that direction, how much is going into the segments. That was it from my side there.

Maybe first on the Investitionsbooster. If I put that in a bigger perspective at least, we now have a government in place that is listen to business, which I find is a very positive contrast to what we had before. So will this Investitionsbooster help companies in Germany? Yes, of course. you know, some of them will reduce their profits because they can depreciate faster. But in the end, of course, the idea is to generate lower taxes and consequently higher cash flows, which I appreciate as an approach. We need more to come. We need the whole country to speed up and get rid of some of the bureaucratic restrictions but again let's be a little bit optimistic and give it the benefit of the doubt at least there is now government in place where I at least notice a genuine interest in fixing things in terms of starting with the economy first because if we destroy the economy you can start distributing money as much as you can in the end it doesn't Maybe that is a comment to the Invested Jones Booster on the restructuring. The way we look at it is not the 900 holding drops. The way we look at it is the overhead in the group. And that overhead distributes over the holding, over our what we call service companies, and the overhead in the divisions. coming back to the question that Philip said, I gave an indirect answer, that's what we're looking at. While we do this, we will also, we will significantly reduce the holding, but not just by laying off all the people, but by also redistributing responsibilities either to shared services, whether it's a defined scope of synergies by providing those services to the group or directly into the business of the divisions. Because we're totally convinced that this is now, first of all, feasible because we only have three instead of five divisions, and second, necessary in order to make our organization more agile and take decisions closer to the business.

Thank you. Ladies and gentlemen, we didn't receive any further questions, so let me hand back over to your host for some closing remarks.

Well, thank you.

Thank you, ladies and gentlemen, for the discussion. If there are further questions, And I guess there will be further questions. Don't hesitate to call us. Just as a reminder, there will be no further call on August 7th because I think we touched all the details today. But you will find an updated version of our presentation giving all the details you are usually familiar with our quarterly reporting. And of course, you will see the full report and the divisional guidance on August 7th on the internet. Concluding, stay safe and I wish you pleasant days. Take care. Bye bye.