Jost Werke Se

Welcome to the Joost Werke Q1 2025 earnings conference. I'm Moritz, the chorus call operator. I would like to remind you that all participants will be in a listen-only mode and the conference is being recorded. The presentation will be followed by a question and answer session. If you would like to ask a question from the webinar, you may click the Q&A button on the left side of your screen and then click your raise your hand button. For written questions, please click the Q&A button on the text button on the tab near your questions. If you are connected via phone, please press star followed by one on your telephone keypad. For operator assistance, please press the operator assistance button on the bottom left side of your screen or star zero on your telephone keypad. At this time, it's my pleasure to hand over to Joachim Dürr, CEO. Please go ahead, sir.

Thank you very much and a warm welcome to the Joost Werke SA earnings conference for the quarter one 2025. You will see Oliver and myself today separated. There's about 16,000 kilometers between us because I'm speaking from the Brisbane Truck Show. But I hope that technology will not let us down and can give you a good overview of what we think was a good start in the year 2025. Going through the Q1 highlights, we were closing the HUVA transaction on January 18th. 31st, 2025, and we were able to get already some positive contributions of that merger on an adjusted EBIT earnings per share level in the first quarter. The post-merger integration is fully on track. The identified adjusted EBIT synergies of 27 million are identified, and we have a very high confidence that we will be able to implement them We had very positive customer and market response to the Hiva acquisition, and that supports our synergy plan. On the market side, we see some slight positive signs in market demand. So the market seemed to be stabilizing in Europe, Middle East and Africa, and as well in Asia Pacific. The US market, as we all know, has been quite hesitant due to the uncertainty of the tariffs and the trade regulations. We also prepared in Q1 the refinancing of the bridge facility that we took to pay the purchase price for the EVA acquisition. And we were able to close that meanwhile in April 2025. So we've fully refinanced the 320 million that we had in the bridge. Let's go to the Q1 results. As I said, we think we had a quite good start despite the ongoing market weakness. Sales were up 25% to 374 million. That was supported by two months, February and March, of the Hiva M&A effect. The organic sales decline was 9% versus the Q1 2004, and that was mainly a result of the weak markets. The adjusted EBITs increased by 3% to 36 million. And the adjusted EBIT margin ended up at 9.6%, which was slightly better than we had anticipated after the consolidation of Hiva. Free cash flow, excluding obviously the M&A payments, went up 26% to 44 million euros. And that was supported by the Hiva consolidation and a proper working capital management. The leverage after the financing ended up at a multiple of 2.45 after the debt financed acquisition, but remained below the 2.5 multiple that we had announced and planned in October of 2024. So Hiva contributed already positively on adjusted earnings per share, partially offsetting the organic sales driven decline that would have been 9%. And thus, with the EVA positive effect, the adjusted earnings per share was only down 3% at €1.65. Next slide, please. Yes, this is the market view. I already mentioned that we see a little bit improvement for the rest of the year for Europe, Middle East. And Africa, what you see here for this region is that the truck market was still down because we're comparing here Q1 versus Q1. And the Q1 was for trucks still a very strong quarter last year. And this year we see the bottoming out effect and see a little improvement, as I said, for the rest of the year. But we'll come to that later. The biggest surprise you will see in America is there we had a decline. over the last year of 15% to 20% on trucks and on trailers and on ag. Ag was weak in Europe and in North America. And in our hydraulic business, we also saw a weaker quarter, slightly weaker quarter, between 5% and 10% below last year's Q1. For APAC, we have the bottoming out effect, some stabilization for trucks, especially in the Chinese markets. India was also stable. The trailer markets more or less on the same level and on tractors, a slight improvement and the same is true for hydraulics. Next slide, please. Yeah, and we also were able to improve our resilience after the acquisition. Now we have a wider range of applications and that you see on the right side of transport applications are 55% of our turnover Ag, 17%, and hydraulics, 28%. And also in the regional split that you see on the left side, we see a more balanced view. Europe, Middle East, and Africa is at about 50%, and the rest is evenly distributed between Americas with 26% and Asia Pacific of 24%. Next slide, please. And I think for more details, Oliver will give you a more detailed view of the financial numbers.

Thanks, Joachim, to Down Under. Let's, as usual, go first into the regions before we come to the group and balance sheet and cash flow items. Looking here into the EMEA region, obviously a big contribution in terms of sales regarding the consolidation that happened also in the other regions, and I will not mention that several times. That means 15% more sales, 188 versus 164 last year's first quarter. However, organically, you see a decline of roughly 6%. And as Joachim mentioned, that was both because of transport and agriculture had a weaker start compared to the last year's first quarter. In terms of organic sales, positive is here at the moment. We see a stabilization and order intake. for both for truck business, but also for agriculture business, gained a little bit of a momentum. We need to see how sustainable that is, but at least at the moment it looks more promising than the weeks and months before, so that we are quite confident with our outlook for the EMEA region going forward. FX effect this quarter hadn't much of an impact. And if you look into the EBIT margin for the region, it declined from 9.1% to 6.1% and absolute EBIT from 14.9% to 11.4%. But this is fully in line with our expectations that we had in our internal models when consolidating Uva. There's nothing special in there, so to speak. And I mentioned that in all the various investors' conferences that we had that which is dilutive, and a big portion of that sales is reported in the immediate region. And that explains also the deterioration of the margin in Enea. Good signs here from the operations is that short-time work that had been in place until February and March in our transport plants in Europe, but also in the agriculture plants in the Nordics, that has been ended. and that should give us a tailwind over the next months. Next slide then. Going to Americas also here, an organic effect from the consolidation, although that's not as big as in EMEA, as HUVA is not so much present in the Americas region than like in EMEA or APAC. So reported growth was 8% only, and the organic sales down was minus 16%, as Joachim mentioned. Two big topics here is definitely the truck business is suffering from the whole geopolitical and tariff discussions in North America. And on the other side, the agriculture business in North America is, again, really down versus prior year's first quarter. On the other side, regarding profitability, you see, despite that, we have absolute rise to profitability increased and also slightly the margin is now up again to close to 11% of EBIT. And there's a strong backwind from the aftermarket business. We had almost 40% aftermarket share in North America and US, which comes with very solid margins. And that definitely supported us. And on the other side, you might remember that we finished a planned consolidation in North America in the second half of last year. That helps to create efficiencies on top. Next slide, please, is then APAC. There's a really boost in sales, report-wise, as HUVA is so much stronger in China and in India. So it's almost doubling the sales from 44 last year's first quarter to almost 90 million euros. So that's on the one side nice. On the other side, we also see here a slight organic decline of minus 7.5%. And this comes mainly from India. The Indian economy is not bad, actually, however. But what we are still facing here is that even one year after the election, the governance spendings in terms of infrastructure programs, economy subsidization is still waiting and still extending. its impact into the economy. We need to see how that goes forward. The China business itself is robust, both in Joost and in Hyva. We are happy of this. Joost is strong here, especially in the export business, and that helps to keep our sales and margin in the APEC region. In the Kwai's Night region, also here we see a let's say consolidation driven decline from almost or from 19% last year to 15% EBIT margin this year, which is driven by the incorporation of the sales of Hyva and totally in line with our internal expectations. Yeah, then let's go into the group. What we see overall is the 25% reported growth from 374. The split into the application slash business line was just mentioned by Joachim. So Juwa contributed 104 million. And keep in mind, this is just two months. So it would have been like for like around 150 million and then contributing almost one third of the sales. Organic sales decline is overall on average minus 9% versus last year at constant currency. And just repeating here, we see first signs of stabilization, especially in AR and in APAC. The outlook here for the second quarter is promising. We need to see. Sales impact in terms of FX was low. And also, as Joachim mentioned, overall, the profitability was good, slightly better than we expected, almost 36 million EBIT, 9.6% margin, partially driven by what I mentioned in North America, nice aftermarket and resilient aftermarket margins. Tridec and mechanical engineering systems provide in our group as an exceptionally high order book. At the moment, volume is not so much lower, but it comes with a very high EBIT margin. And that boosted that a little bit of our internal models. Yeah, I think that's it for the group. And then we can jump into our net earnings bridge. So the reported net income is $13 million for the quarter. If we then add back taxes, interests, and the adjustments that we do for PPAs and purchase price allocation amortizations, as well as other exceptions, and I will come to that because that's a little bit special for this quarter in a later slide, we end up with that adjusted EBIT that we mentioned of $36 million. And then correcting by an adjusted finance result, an adjusted tax rate, we end up with 25 million adjusted net income, resulting in an adjusted EPS of 1.65, which is almost the same level that we had in the first quarter. And that means despite the organic size decline in the business lines, agriculture and transport, we were partially able to offset that net earnings decline with the result that Uwe already contributed to the overall group. And again, regarding the exceptions and the PPA, I will come to that a little bit later. So what we show here is the preliminary purchase price allocation. So overall, we have acquired and closed a balance sheet by end of January of 671 million euros. And what you see here is then the balance sheet that we are incorporating now in our numbers for the first time, asset side and liability side. These numbers here already include a preliminary status of the purchase price calculation. So that means we revaluated the assets, the intangible assets, PP&E assets, as well as inventories. And also on the liability side, there were certain minor adjustments. And you also see the equity. There was also a recapitalization of the group directly with closing. You can see here what has been incorporated. And this, in a nutshell, means preliminary purchase price at the moment, preliminary because there is still a final settlement mechanism outstanding with the seller, should be only minor, regardless of, let's say, opening working capital accounts and so on and so forth, was $327 million in cash. This purchase came also with an operating receivable of HUVA against the former shareholder that has been immediately settled with closing. And that means the net cash proceeds have been 309 million euros. And if I add then back the debt and the IFS leasing positions, deducting then the cash that we get or got, rate of the past weeks and months, this is more or less in line with the purchase price or EV that we always communicated. It's even a little bit less. So in US dollar, it's roughly 10 million, a 10 million euros deal less than the 398 that we communicated. The main intangible asset groups that have been identified of 276 million euros are for sure trademarks, so the trademark Hyver, as well as customer relationships. Weaver has strong customer relationships all over the world like most have and those relationships will be capitalized. I just want to mention here again these valuations are not yet final. We are still in discussions with the auditors and experts. There might be changes. I don't expect any material changes at the moment. amount of the trademark Huber that is incorporated might change a little. Goodwill at the moment stands at 37 million. And just keep in mind, these numbers can always fluctuate a little bit, especially at the moment when USD and Euro rate fluctuates more because the original balance is a USD balance and not a Euro balance, like shown here. And let's go to the next page. This is then the P&L look into the PPA, so to speak, and the exceptionals of the first quarter. You see here we report overall minus 14.2 million adjustments versus minus 7.1 million last year's first quarter. And we have grouped that in four groups. You see the dark blue group, that's the roughly 6 million, let's say, legacy PPA that you have. No major changes here. Then we report minus 3 million exceptionals last year, where the increase is predominantly driven by integration costs, restructuring costs that are fully related to the acquisition. And then we have separately marked here out which we would consider that's the core new PPA topic. And with the cipher number 1 and the cipher number 2, cipher number 1 minus 2.8, that's the The PPA from Viva itself, including also order backlog depreciation and a portion of that 2.8, so excluding the order backlog, will continue then for the next years. I will sum that up in a moment. And then we have on top built a fair value step up That's a usual process through a purchase price allocation. That amount is for the total year 2025 roughly 40 million euro and 2.5 million have been already consumed in the first quarter. Just again here to mention, you cannot just multiply by four because Viva has only been incorporated by two months and not three months. What does this mean for the net income in 2025? We expect from the PPA as well as from the inventory step-up amortizations, a negative net income impact between minus 21 to 25 million euro on reported net income and reported earnings, which will be adjusted in adjusted EPS for sure. And going forward, so from 2026, as then the inventory step-ups are already fully phased out, as well as the order book look depreciation from the normal PPA of Weaver, we will expect a net income effect of between minus 9 and minus 13 million euros per annum. Finally, depending on, as I said, the valuation, especially for the trademark Weaver and for Goodwill is not yet finalized. Next page, please. Coming then back to a balance sheet and later on to cash flow, we see a decline in ROSI from 17% to 13.5%, also fully expected and in line with our internal model. No surprise, that's a are driven by the consolidation again we are adding 670 million balance sheet we need now to work with the leveraging and with working capital measures on keeping that balance sheet some lower and on the other side on the other side increase our net earnings and that will then step by step bring the rosy back into our mid and long-term guidance Equity ratio, basically the same story. No surprise, we had expected around 23.5 to 24% equity ratio, driven by the financial liabilities that have been put on the balance sheet to finance the acquisition. Net debt, Joachim mentioned before, we were always striving for having not a leverage above 2.5 in And we managed that successfully. Net debt is 451 million. And despite the fact that the LTE and EBITDA, just by market-driven decline of sales volume and EBITDA, also in the already worst world, have been lowered, we are still below that threshold and are quite happy with that because it also gives us a benefit in terms of our interest margin. Let's go next page. Joachim mentioned that at the beginning, we already successfully refinanced the bridge financing. The initial amount that we draw down was 350 million. We managed to, immediately after the closing, pay back already 30 million of the bridge facility. So it stands at 320. And as you know from the press, we were launching a show shine, a promising node launch. It was highly oversubscripted. At the beginning, we would have not expected to fully refinance the bridge facility at once. However, finally, it came out through the process that despite attractive margins from our side and a nice mix in terms of terms, the appetite from credit investors was so high that from our side we see now we have a very nice maturity profile over the next years and that's important for us because now we can concentrate on really the operational work and the synergies and this is also work for the finance organization and having that stability in terms of the finance profile now in our back that gives us freedom to look for the potential going forward. Next page please. is then our cash flow KPIs. Cash conversion rate has been 1.8 and reported free cash flow of 44 million. A nice increase, partially supported by consolidation effects of UVA. As I mentioned, there was an old receivable, it was an operating receivable that has been immediately settled. And on the other side, working capital measures and also a little bit of an increase in factor in support of that nice cash flow figure. CapEx, as always in the first quarter, has been a little bit under the expectation for the full year with 1.8% or absolute-wise 6.7 million. That's because normally the projects start a little bit slowly into the year. And also here you see no major impact from the EVA consideration. We always have mentioned that the CapEx profile is very similar to the used one. Networking capital, that's indeed something quickly to mention. The balance sheet of Viva comes with a tendency higher working capital ratio than in the old Yoast legacy and that's predominantly driven by the APEC region. So Viva is strong in the APEC region and in the APEC region, let's say the business model comes in the whole supply chain that Viva has with a higher amount of I will mention that at the end of the presentation. The next page, please. I think that's from my side, giving back to Down Under.

Yeah, thank you, Oliver. So let's look at the market for the full year now. That's the full year expectation. What you saw before is the Q1. That's a little bit tricky to look at the Q1 because we had a partially very strong quarter to compare with. So this is now a better comparison. You see the effect of bottoming out that we expect for the Europe, Middle East and Africa region, where we see the markets for truck go up slightly between 0% and 5% for traders, 5% to 10%. And also in tractors and agriculture, we see a slight improvement as well as hydraulics. The big unknown, obviously, is America's highly dependent on the very volatile communication on tariffs and economic boundary conditions. So I think there we probably have to wait and see. Our flexible business model allows us to respond very quickly in our local for local setup. Also allows us to not have too big of an impact out of the tariffs. So we should we expect that we can manage that a bit better than most of our competitors. So, but of course the best would be if we would have stable conditions. And right now, this is what we see from the market expectations. But as I said, you know, that depends highly from the tariffs and the tariff communication. And right now we would probably see that a bit more positive after the tariffs between China and the US have been, yeah, at a, agreed for a certain time, at least at the lower level. And for APAC, as I said earlier, we also expect the bottoming out effect, slight improvements in the Asia Pacific region on trucks, on trailers, but also on agricultural tractors and on hydraulics. So next slide, please. Yeah, that's the outlook then for the entire year. We confirm the guidance that we have given. We expect sales to be up 50% to 60% versus prior year, mainly the M&A effect from the EVA acquisition. The adjusted EBIT we expect to be up 25% to 30% versus prior year, which was at the level of $113 million. Also, adjusted EBITDA we expect to go up at the same rate, 25% to 30% versus the 148 million that we had last year. Our capex ratio, as usual, below 3%, 2.5% to 3%. We expect to be at 2.9% of sales. And working capital ratio, we will bring down below the 18.5% of sales. Let me give you a little insight of the post-merger integration. When we talked about the Hiva acquisition, we promised that We will have an accretive business on an adjusted EPS base from the start, which I'm very happy to confirm that that was already the case in Q1. But we also said that we will implement synergies that you would see in the run rate until the Q4 2026. And we said we would need about 20 million of synergies to come back in our margin corridor. This is the current planning right now. We have identified 27 millions of annual savings that you can see in the run rate of Q4. The majority, I would say a bit more than a third, we expect from purchasing just better negotiation, better supplier access, higher volumes, bundling effects with our supply base. Sales, that is additional margin that we generate out of additional sales. I mentioned already, customers are very positive. We have a lot of new leads and we expect also that we will have a very positive effect out of that. Cost reduction in shared services, typical SG&A cost, about the same percentage. So I would say sales and shared services is probably together maybe half of the entire synergies that we expect. And the rest would be between production, improved production, consolidation, or producing, insourcing even some of the components that we can produce in our existing facilities and improve logistics and other costs. That adds up to the 27 million of potential that we have. Out of that, we would today say 17 is we have a very high confidence level already that we will be able to implement that. On 10 million, we rate as high confidence, and 10 million, we are in the process of identifying and confirming that potential. So in total, we have 30 post-merger integration teams working. 270 people are involved worldwide. We expect one-off integration costs, redundancies, closing costs, and others between 12 and 24 million. We see strong R&D potential on top of that and that will lead to new products in the long run, especially for the digital solutions that Hiva has already and now brings to the family. And I mentioned it earlier, we have very positive customer feedbacks and also here at the truck show in Down Under, we get very positive feedback and interest from our customers and that confirms the sales synergies. So to sum it up for this year, we had a good start to the fiscal year 2025, supported by the consolidation of HUVA for the two months starting February 1st. The PMI integration for HUVA is well on track, strong synergy potential, and that supports our mid-term targets. We have a very robust financial development, boosted by a strong free cash flow, and the well-managed leverage. And Oliver explained in detail the refinancing that we have closed now in Q2. The local for local approach and the strong market access worldwide limits our direct impact from the tariffs. So everybody suffers, but we have, I think, a very good setup with our local for local production. The markets are bottoming out and demand is picking up in Europe, Middle East and Africa. and also in Asia Pacific. And in America, as we'll have to see, it all depends on the tariffs discussion. So we confirm our outlook 2025. Our resilient business model offers strong opportunities to continue the profitable growth path that we've had in the last years. So with that, that's the summary, and we're eager to hear your questions and to answer them.

Ladies and gentlemen, We will now begin the question and answer session. Anyone who wishes to ask a question from the webinar may click the Q&A button on the left side of your screen and then click the raise your hand button. For written questions, please click the Q&A button and then the text button and type in your question. If you are connected via phone, please press star followed by one on your telephone keypad. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press the lower your hand button from the webinar or press star two on your telephone. Anyone who has a question may queue up now. One moment for the first question, please. And the first question comes from George Gonzalez from Hochaufheuser Investment Banking. Please go ahead.

Hello, good morning Joaquim and Oliver. Thank you for taking my questions. If you don't mind, I would like to do them one by one. And the first question is on regards the guidance on Hiba. The Q1 was quite strong and with this run rate, obviously, of margins that you have, You have delivered. The guidance looks quite conservative now in EBIT. So I was wondering if you can first give us more or less the profitability for Hiba in the first quarter and maybe if you can you can indicate us more or less what you are expecting for the year. And then also, if you can comment on decisionality, if there is a reason for expecting margins to decline a little bit for the rest of the year, or if in fact, if there is no further deterioration in North America, you are in the right track to beat your own guidance. That will be the two first questions, please.

Joachim, maybe I start with the Hüver question and you can take North America. Regarding Hüver, indeed also Hüver. Also, Eurosport is slightly better than we expected. And always keep in mind, first quarter is our strongest margin corridor. So that we need to always incorporate when it comes to seasonality topics in the second half. But answering your question directly also, Viva was definitely better than we expected and better than the run rate that we have seen of Viva in the last months before we closed the transaction. There's one effect in there, and this is why we are still a little bit cautious, to be honest, and don't want to change the guidance at the moment, and it's not necessary because we are fully in, is that Remember that there is this business unit Cranes, which is a dilutive business unit, and we are sorting any option at the moment still. And this is a task for 2025 to make a strategic decision here. However, immediately when Yoast took over the business, we settled topics in the supply chain of that business unit, et cetera, et cetera. There was pressure, obviously, before under the PE ownership. And that immediately released a little bit of margin pressure they had in the past, not because they could eat up their backlog and so on and so forth. And that had positive impact on Viva. We need to see how sustainable that is. For sure, we are working on.

Yeah, and maybe just to add to that, We think it is according to plan. You have to keep in mind that if you look at the recent years, we've always had the strongest margin in the beginning of the year and then weaker quarters after that. And with that, I think it is within expectations. So we don't see any reason to change it for now. And Oliver explained the one-time effects. North America is a profitable region for us. It's usually helping the overall margin quality. We have not seen our margins go down in North America with reduced volume at this point in time. there could be some effects, and therefore also we may be a little more cautious. We were able to offset the volume effect by the improved situation in our plant in Michigan. The plant consolidation there has helped our cost basis, and we see that positive effect more or less ironing out the negative volume effects that we have.

That's a very high aftermarket share. Yeah, correct. Which might be also impacts from the tariff topics now that dealers buy the stock to have stock whatsoever. But that might have a little bit of extra support. Normally we have in North America aftermarket ratios of around 30% and they have been up to 40% in some months.

Interesting. I couldn't read through all the report, but can you share the aftermarket share for the group in Q1?

We don't disclose this really on a quarterly basis, but it should be around 30%, so definitely up versus the run rate over the past months before.

Okay. And then you prefer to not guide us for the Hibas margin, no? In Q1, I understand.

You understand correctly.

Okay. And for the year, maybe?

For the year, I think we mentioned before, we come out of 2024 in the numbers with around 6%. And definitely we want to be close to 7% by the end of the year. That's definitely a target.

Okay. And then two quick ones. On the one of cost, I think the range is quite large. So I am wondering, this means that you are expecting this 24 million in between two years, maybe? Or is really that you see potentially This one, of course, coming only at 12 million euros in the long run.

I mean, the run rate at the moment would be then 12 million if I just multiply or even a little bit less. But if topics come like the calf out of a crane's unit and so on and so forth, like you mentioned, and also it's only two months. So... Yeah, I think at the moment the fair guidance and from a timing point of view, I would expect that the biggest portion should be in 2025.

Okay, so it's not like you are targeting 2024 and you don't know if it's all in the first year and then some in the second year.

We don't expect that we take a lot of one-off integration costs into 2026. Yeah.

I would also say the synergies will mainly be in 2026, but the one of cost will mostly be in this year because closing costs, redundancy costs and potential carve out costs that will mainly be in this year.

Interesting. And maybe a last one from my side. So in terms of the market outlook, I mean, the highlight is that you see some improvement in EMEA and APAC or some stabilization. let's say. Do you see this for both truck and trailer or it is more clear in one of them? Can you give us a little bit more detail on that?

Yeah. No, the trailer market responds typically quicker than the truck market. So we see it more in the trailer market than in the truck market. Even though we see our OEM customers in their planning, they have added some volume recently, so they are more optimistic than they have been. And in traders, we kind of see it already happening in the orders, whereas in the trucks, we see it more in the outlook that we have. But we will also see already a little bit in Q2. So I would say it's as usually the trailer market is a bit quicker in responding. So it's a bit faster going up, but we also see it on truck and also gladly in agriculture.

Okay, very clear. Thank you very much. I go back to the line. Yeah, thank you. Thank you.

Then the next question comes from Jasmin Steilen from Berenberg. Please go ahead.

Hello. Many thanks for taking my questions. I have four, if I may, and I will take them one by one. First, on your guidance, again, coming back to this. You mentioned an assumption of a deteriorating business in Americas for the remainder of the year. Could you please elaborate a little bit more on the impact of the changes or of the regional assumptions And what are the offsetting factors of the US weakness that gives you confidence in keeping the guidance unchanged? So are we talking about market share gains, pricing, or the slightly better than initially expected development in EMEA? That's my first question, please.

Yeah, I mean, the market expectation that we have in the assumptions for North America is that is quite low but there are effects as you as you states that would partially compensate that the one is typically when the oem markets go down we see the after markets be a bit stronger because vehicles are being used longer and then that's when dealer prepare and when they increase their stocks for for potential spare parts and that gives us a profitability boost, and that can help compensate some of that. Also, we see some potential in North America in agriculture, and we don't see South America, and the numbers that you've seen is for the entire Americas region, we don't see South America as much under pressure. Brazil has not been strong in the last half year, I would say, but we don't see the same negative effect in the other parts of the region. So it's merely, you could say, a US-American effect and the southern part of the continent will not be affected as much.

Yeah, probably just adding, that's an important comment for you, Yasmin. So we have in Brazil, we have a huge business and this is exposure here is construction predominantly and that's running okay. Plus on top, we have gained here a substantial customer You obviously don't see this in the market over the slide.

Okay, perfect. That's very clear. Then the next question on Agri. So we've seen general business climate index moving upwards also in May. So you mentioned already that order intake was gaining some momentum. Could you update us on the current discussion with your customers? So is de-staffing kind of finalized? And when should we expect the first really meaningful impact on your order intake?

Yeah, I think we could say that the destocking is finalized. It was happening a lot at the dealer level because in the ag industry, the dealers are not as connected to the OEMs as they are in the transport industries because they're typically private dealer groups. And so what happened in late 2023 was that the OEMs were selling to the dealers, the dealer stock was very high, and the dealers just did not reorder. And the truck industry, since the dealers are mainly captive, or a lot of them are captive, there's a better coordination than we had there. So we see the dealers reordering. implements tools, but also loaders to fit existing tractors with loaders. And then we will also see that at the OEM level. But yes, I would say that the stocking at the dealers is coming to an end. They are preparing for the season. And that is reflected in the sentiment of the industry.

Then a question on cost synergy. So many thanks for sharing the post-merge integration dashboard. The transparency is highly appreciated. Could you provide more insights in the 10 million kind of work in progress part? What is reflected there and what could change your assumptions on the likelihood of the realization?

Yeah, go ahead, Oliver. Yeah. To be honest, this is not that this is then a different kind of category. So this is also then topics that might impact or come from purchasing synergies or logistic synergies. But I would say that the degree of implementation level is just so premature that we are not confident enough to put it there. It's mainly filling up a bucket, which we can always use in case even in the bucket of high confidence, some ideas might fall out. impact that we can fill up the pipeline again back to the 27. But again, it's all over the P&L and the balance sheet topics.

Okay, perfect.

I just wanted to make sure we're not talking about kind of a single project and a very... It's just this pie here, so to speak, is more a classification in terms of degree of implementation. Okay. Okay.

It goes more or less through all the five buckets that you see on top. I would say a big part is probably purchasing because they are the ones that are implemented the quickest together with the logistics. But you can say that the high confidence is just a part of all of the five. Each employee has a part in that high confidence, in the very high confidence and also in the in-progress.

Okay. Many thanks, very clear. And finally, just a housekeeping question. The around 10 million realized FX gains, are they solely related to the hedging of the Hüver purchase price, or does it also reflect other effects?

No, it's more or less the purchase price.

Okay, perfect. Many thanks. I'll step back into the line.

Just a comment to that. P&L-wise, net income-wise, this effect has been already incorporated in 2024. if we are mentioning the same, but probably you can reach out to Yasmin. Sorry.

I will definitely do. Thank you.

And the next question comes from Nikolai Kemp from Deutsche Bank. Please go ahead.

Yes, good morning to Nikolai from Deutsche Bank. Thank you for taking my question. And well done in Q1. And know that the capital market appreciates that with share price reaching all-time highs. A couple of questions from my side, maybe starting with the U.S. tariffs. Trucks are not that much impacted by tariffs, just probably one on the steel and aluminum. Are you confident to pass it on to your end clients?

No, I can go ahead. I'm not sure if I understood the question right. Are you saying we are not impacted or our customers are impacted? Our customers are quite impacted, actually, because their supply chain goes across the Mexican and the Canadian border and other borders. sometimes even three or four times until the part is actually in the in the factory so we've seen them taking out volumes uh in those uncertain times because i think they at least that's what they tell us is they have a hard time even understanding the cost at which they produce um these trucks that they are producing today because there's so much terrorist effect and it's unclear when it goes across the border three times, if there's three times the tariff or if that gets compensated and therefore that uncertainty is something that led them to reduce the volume. For us, we have calculated our effects. The primary effects we have calculated, they are not as relevant because we're not buying so much from outside of the US for our transport customers. We don't have a huge effect. The secondary effects could be more or less at the same level. That's when we get secondary effects from our US suppliers when they claim cost increases. We expect, and with some customers, we have agreements. With others, we will negotiate. We expect that we will be able to compensate a good portion of that in the price to our customers because it hits everybody. And in the end, the products will be more expensive and our customers have already raised prices, which they are now partially taking back with the new agreement.

Okay. My comment, Terrence, was regarding to trucks, mostly heavy trucks, which are so far not part of the carrots, but they're looking into that. But understood. Thanks. maybe on the probability side, we understand why you're a bit more cautious on North America and the markets there. Also with APEC, because we see higher dilution, right, with Huber coming in for the entire quarter in Q2 and onwards. But on Europe, is there upside potential just given that you stated the market is coming back and that's something that's happening in all segments, right? truck, trailer, agriculture?

If you are seeking for upside, I think there might be on top dilution effects going forward because it's only two months also in EMEA. And we need to see how the crane's business develops. But in general, I would say yes, for sure. In the European region, we are suffering more than compared to other regions when capacity utilization is lower. And that has been over the past months. And when especially the truck business, starts to pick up, which we see, but at least let's be a bit cautious at the moment. This is sustainable. Then we will have a scale effect. That's clear.

Okay. Next, my final one on the leverage. Any target by when we should expect leverage to be below two times again?

I mean, we set for this year the clear target to be 2.5. I mean, we have now to digest the dividend and so on and so forth. By end of 2026, if economies are really picking up and 2026 is expected to, at least in the moment, be better, infrastructure programs, blah, blah, blah, close to the 2.0 by end of 2026, I would guess so, yes, at the moment. Thank you. Thank you, Nikolai. Thank you. I think there's one text question from Pierre Castella. I just read it loud. Can I assume that the 44 million euros of free cash flow of the first quarter is a low point going forward? Pierre? It is positively impacted by one of topics from the Viva consolidation. So the runway is potentially lower. So you cannot just multiply by four times. You should make a cushion.

As there are no further questions at this time, I would like to hand the conference back over to Joachim Dürer for any closing remarks.

Yes, thank you very much for your interest and for your questions. Very glad to hear that you are happy with the results. And I'm happy that not only we get good feedback from our customers, we also got good initial feedback from the capital market. So with that, we will continue the path. And as I said, we are very happy that we are Performing according to plan, so that looks like a stable development. And with a little bit of support from the U.S. tariffs situation, I think we should have a continued good year. So with that, we'd like to close the conference and thank you a lot for your interest in Joost Werke. Thank you very much. Bye-bye. Bye. Bye-bye.

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