Kion Group Ag Unsp/Adr

Ladies and gentlemen, welcome to the QION Group Quarter 1, 2026 update call and live webcast. I am Chloe, the course call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star then 1 on your telephone. For operator assistance, please press star and 0. must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Rob Smith. Please go ahead.

Thank you, Chloe. And good afternoon, ladies and gentlemen. Welcome to our update call and webcast on the first quarter of 2026. Please refer to our update call presentation on the IR website if you're joining by telephone. I'm going to start with a quick summary on the first quarter of 26 and talk about some recent business highlights. And then Christian's going to take you through the detailed Q1 financials and reiterate our guidance for 2026, and I'll be back for some key takeaways, and we're looking forward to the Q&A thereafter. Starting on page three, please. Dion had a positive start into 2026, in line with our expectations. Order intake was 3 billion euros, driven by both segments. Revenue was slightly below the prior year order level. Adjusted EBIT was 205 million euros, corresponding to an adjusted EBIT margin of 7.4%. Both ITS and IAS segments contributed to the increased profitability. And free cash flow was positive at 47 million euros, and included the cashed out for the efficiency program and higher incentive payments. On page four, let's talk about the exciting things that are going on at Kion right now. In the context of our strategic collaboration with NVIDIA and Accenture, Lighthouse Physical AI projects moved from simulation last year into live warehouse operations. showing how advanced AI is turning into measurable value for customers. At the GTC conference in San Jose, California with NVIDIA in March of this year, we showcased two core applications, an autonomous industrial truck supporting day-to-day warehouse operations and AI-based safety-certified human detection enabling automated trailer loadings. We've deployed these at a warehouse of GXO Logistics, the world's largest pure-play contract logistics provider, in their warehouse in Epinoy, France. This pilot makes an important step forward in demonstrating physical AI solutions and how they deliver clear, tangible value for our customers. Another highlight in the first quarter was the Logi Mat in Stuttgart, where we presented a true milestone in intralogistics. the first market-ready, serial-produced solution for the autonomous loading and unloading of trucks. We demonstrated how the receipt and dispatch of goods practically takes care of themselves thanks to the new product called the AXL IGO from Still, leaving employees hands and minds free for more value-added tasks in the warehouse. In addition to these two great milestones, we also made an exciting addition to our startup automation portfolio and deepened our technological footprint in warehouse automation through an M&A action. With a strategic equity investment in Ziku Robotics, a leading provider of pallet storage robotics based in China, we marked the next step in building an ecosystem of automated technology partners. The partnership brings together Kion's extensive experience in industrial trucks, inter-logistic solutions, and orchestration with Ziku Robotics Innovation and Warehouse Robotics, a six-way pallet shuttle, and high-density storage technology. Through an expanded portfolio of automation warehouse solutions, Kion will deliver warehouse offerings that provide higher efficiency, better space utilization, and greater flexibility. and the investment is already bearing fruit. Last year, we jointly unveiled the next-generation pallet warehouse solution, the AI Smart Warehouse. The solution integrates Ziku Robotics' latest pallet handling robots, high-speed lifting systems, and AI intelligent software platforms. I'll now hand it over to Christian, and he'll take you through our detailed Q1 financials.

Thank you, Rob. Let's go to slide six. for the key financials for the ICS segment. Contrary to our earlier expectations, order intake increased by 11% year over year to almost 73,000 units. The increase contains significant pre-buying activity in the later part of March, following a price increase announcement becoming effective on April 6th, 2026. is a good example of our agile pricing strategy where we regularly review the appropriateness of the current pricing. This price increase was announced to cover expected increases in material and energy costs resulting from the war in Iran. New orders in value terms increased 4% year-on-year. The slight decline in the service business was substantially more than compensated but a 12% growth in the new truck business, which also points towards a good product mix in the quarter. Revenue was down 5% year-over-year driven, but a 9% decline in new truck revenue, which was due to the lower order book at the end of 2025 compared to the end of 2024. Adjusted EBIT was 183 million euros, and was comparable to the prior year level. Savings from the efficiency program and lower share price driven expenses for the long-term incentive programs were offset by the continued insufficient fixed cost absorption. The adjusted EBIT margin increased to 9.1%. I will now continue on page 7, which summarizes the key financials for IAS. For the fifth quarter in a row now, order intake showed year-over-year growth. The increase of 26% was driven by a 56% growth in business solutions. Main verticals contributing to the growth were purely e-commerce, 3PL, and food and beverage. Order intake in services was slightly down due to the positive one-time effect in the spare parts business in the prior year quarter. The order book increased 23% year-over-year due to the increased order intake as well as to a lesser degree positive foreign currency effect. Overall, revenue increased by 12% year-over-year driven by a 30% growth in business solutions. The sequential development follows the order intake development with approximately six months time lag. The trusted EBIT increased strongly Year-over-year, 46 million euros, corresponding to an adjusted EBIT margin of 6%. Higher revenues, deferral reduction in legacy projects, improved project execution, as well as lower expenses for the long-term incentive programs contributed to the increase in profitability. The sequential decline in adjusted EBIT is a result of the sequentially lower revenue. Now let's quickly run through the key financials for the group on page 8 then. Order intake reflects the growth in the new business in both operating segments, which also had a positive impact on the development of the order book. Revenue in IES continues to benefit from the order intake recovery since the beginning of 2025, offset by the expected revenue decline in the ITS new drug business. Adjusted EBIT increased to €205 million, corresponding to an adjusted EBIT margin of 7.4%. Profitability improvement was driven by both operating segments, supported by savings from the efficiency program, lower expenses for long-term incentive programs, and slightly lower expenses in the corporate services and consultation line. Page 9 now shows the reconciliation from the adjusted EBITDA to group net income. Non-recurring items in the first quarter included only 5 million euro expenses relating to the efficiency program. You may recall that we said that out of the total expenses of 180 million euros, 169 million euros were expensed in 2025 already, and the small remainder will follow this year. PPA items were in line with the usual quarterly levels. Net financial expenses improved year over year, mainly due to the lower interest expenses on financial liabilities and the improved net interest result from the rental and leading business, partially offset by costs in relation to foreign currency and interest hedging activities. REITX earnings therefore increased to 141 million euros. Tax expenses of 49 million euros in the quarter corresponded to a tax rate of 35%, and thus are in line with our full year expectations. Please refer, as usual, to the slide in the appendix with the unchanged housekeeping items. Accordingly, net income attributable to shareholders reached 19 million euros, corresponding to earnings per share of 69 euro cents. Let's now continue with the free cash flow statement on page 10. Free cash flow in the quarter reached positive 47 million euro despite the cash out for the efficiency program as well as high incentive payments. Lower capital expenditure is in line with our full year expectations as the larger footprint projects of the last years are coming to a conclusion. The increase in net working capital is seasonal and should reverse again over the course of the year. There was no material cash outflow yet for mergers and acquisitions in the first quarter of 2026. Moving on to page 11, which shows the pretty stable development of net financial debt and our leverage ratios. In March of this year, we successfully placed a corporate bond with a total volume of 500 million euro using the public capital market under our established EMTN program. Despite the challenging environment, the issue attracted a great deal of attention from investors. The unsecured bond, which matures in March 2031, was issued at a price of 99.487% and has an annual coupon of 4.125%. From Q2 onwards, the proceeds from the bond will be used to refinance existing liabilities in the short-term rental and leasing business to create opportunities for future growth. Slide 13 lays out our guidance as presented with the full year 2025 results. Since we provided a detailed walkthrough of our guidance at the full year 2025 update call at the end of February, we will skip it here in the interest of time. For those of you who are interested in the explanation, please refer to the transcript which is posted on our investor relations website. The geopolitical risk have heightened since we published our full year 2026 guidance at the end of February. In effect, the war in Iran started just two days after our results publication. We have limited direct impact as our revenue in that region is around 1% of total yield revenue. However, we do see potential impact from higher material and energy costs and vulnerabilities in the supply chain. Many capital markets participants have drawn parallels to the situation in 2022 with the start of the war in Ukraine, which was also characterized by inflation and supply chain disruptions. We here at Kion had learned many lessons in 2022 and expect the measures we developed to increase our agility and resilience in volatile times to serve us now in 2026. The April price increase in ITS is one such measure. The inclusion of price adjustment clauses in the terms and conditions and contracts is a further measure, as is the building of safety stock and developing additional supply sources for key affected components. We therefore confirm our outlook for fiscal year 2026 for the group and our two operating segments as of today, subject to the condition that no additional significant burdens arise from the current geopolitical situation. On one hand, these could result from significant disruptions to our supply chains, for example, due to trade barriers or shortages of important components, or from a decline in demand due to a significantly reduced willingness of customers to invest. On the other hand, the guidance assumes that the steps carried out to counter cost increases will have the anticipated impact. And with that, I now hand back to Rob for our key takeaways.

Thank you, Christian. On page 14, let me walk you through our key takeaways. Keyon had a positive start to fiscal year 2026 with order intake and profitability increasing in both operating segments and a positive free cash flow. We are actively steering the organization with our operational and commercial agility measures to limit potential impacts from the war in Iran. Kion is making significant advances in developing innovative physical AI solutions for our customers. In March, we presented the first Lighthouse project with customer GXO as a next step in the strategic collaboration between Kion, NVIDIA, and Accenture. We also launched the first market-ready series-produced solution for the autonomous loading and unloading of trucks last month. And this month, we made a strategic equity investment in a leading provider of pallet storage robotics, Ziku Robotics. We confirm our outlook for fiscal year 2026 for the group and our two operating segments subject to the condition that no additional significant burdens arise from the current geopolitical situation. This concludes our presentation. Thanks for listening so far, and we're looking forward to taking your questions. Chloe, let's open the line, please.

Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their telephone. 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 star and 2. Questioners on the phone are requested to disable the loudspeaker mode and eventually turn off the volume from the webcast while asking a question. In the interest of time, please limit yourself to two questions. Anyone who has a question may press star and 1 at this time. The first question comes from the line of Fen Weir with UBS. Please go ahead.

Yeah, good afternoon. Thanks for taking my questions. I'll start with trucks. And thanks for pointing to the price increase in the pre-buy. As you imagine, I would be curious how you have, you know, seen orders developing after the price increase. I mean, have you seen like a sharp normalization or is business as usual? And I also wonder, of course, if you look at the guidance for trucks and you take the midpoint of that, I guess it also assumes kind of a better mix in the coming quarters. Now, in Q1, I think the mix has improved year on year, but not sequentially. So how do you see that mix support for making that EBIT increase possible in the coming quarters? That's the first one. Thank you.

We're going to double-team on this, so I'll give you some insights on the price increase and the developments, and Christian's going to talk you through the mixed calculations for your model here. As you know, we put up the prices. We only did it 3%, and we put it for the 6th of April, and there was a pre-buy effect for sure. How much that is, we're still in the process of working out. And we shall see as things develop through end of this month and going into next month. So it's a bit early to tell, but clearly there was an element to that. And Christian is going to talk you through the mix here.

Yeah. So, Sven, as I said in my commentary to the numbers already, right, The numbers in the first quarter actually indicate that we had a positive mix in the quarter that will support revenue in the following quarters, obviously, as it turns into revenue going forward. And that's also sort of, you know, how we would look at the development now going forward actually, right, in terms of mix, yeah. So that should actually, you know, be in line and is in line with what we have set out in our guidance for the segment. Yeah.

And, I mean, can I just ask and follow up on this? In terms of the difference, because in trucks you also have price indexation clauses. So you could say, well, do you really need a price increase or are you not covered by the price indexation on the truck anyhow and you don't need to bother with price increases anymore or do you still prefer like a general price increase like you just did?

Yeah, just when, let me sort of, you know, go back, you know, two or three years so that the comparison is clear, right? In 2022, we were actually sitting on an order book where orders were placed for shipment, you know, almost, you know, six, eight, almost 12 months time delay. So, some even longer, right? So, the point was the time when the order was placed, which then contained the price of that, to the time of the shipment, which is then where the costs were relevant, actually was extremely long, right? And we were actually exposed to the material cost inflation risk, if you will, over a pretty long period of time. Now, the point right now is, with our order book, you know, having normalized, that period is significantly shorter. So, yes, we do have clauses, right, that would allow sort of, you know, between the timing placing the order to the shipment order when that is beyond certain thresholds, but everybody should be reminded that it's then based on an average now three to four months period and not like what we had before. Now, when we see developments coming, and that's what I said, you know, in my commentary before, But when we do the assessment in the HL pricing in terms of what we feel is coming up to us in terms of energy cost, material cost, we are actually looking way beyond this time of just three months, four months going forward. And that needs to be covered then in the pricing of the trucks as such. And therefore, we have actually changed or increased our list prices at this point in time.

And can I just ask one question on wealth automation? because obviously you had a very good order intake in the quarter, and usually when we had this in the past couple of years, the next quarter tended to be quite a bit lower. I mean, should we now see a more stable range, say, between 800 and a billion to achieve your full-year target of flat orders, or would you still guide us to this, like, extreme lumpiness that we've seen in the past two, three years?

Thanks. Oh, Sven, you did a triple dip on us. And they're asking me about order intake gains. But let me pick up one. I mean, the whole point is that I'd like to make here is you'll recall last year we had a fantastic second quarter order intake. It was an all-time high, clearly over a billion. My recollection is a billion four. So as we go into the second quarter, if you're looking for year-on-year comparisons, that was a tough comparison. what I would say is, shout out, five quarters in a row now, there's some very good order intake coming through in our IAS business. I told you a couple calls ago that we think the trough in the market is clearly behind us. We continue to see the market moving in a direction that's good on order intake for our intelligent automation solution segment, and we would expect to have a continued good performance there, potentially a little bit less lumpy than in previous times when there was a whole bunch of volatility in the market and wasn't exactly sure where the trough was. As I say, the trough's behind us, maybe a little bit less lumpiness. I think it'll be a real tough comparison versus the all-time record, but I would expect we have a good Q2. I'd also... holler out as long as we're talking about it. Four out of the last five quarters, Christian talked about our 73,000 trucks sold in order intake in the ITS segment. That's four out of five quarters we beat Toyota in terms of order intake units. I think that's a nice strong performance. So a little triple dip from my side too, sir.

Thank you, Robin. Thank you, Christian. Much appreciated.

We now have a question from the line of Akash Gupta with J.P. Morgan. Please go ahead.

Yes. Hi. Good afternoon, Rob and Christian. I got two as well, and I'll ask for the time. The first one is on ideas. So when we look at your Q1 orders, you are highlighting that there is some pay-by effect, and that is in relation to your price increases, which is increasing your cost base. And the question I have is that when these orders will be turned into revenue, is there anything we should look after in terms of impact on margin from this cost increase, which is leading to price rises? Or do you have some mechanism like hedging or inventory in place so you can mitigate the impact? So question is, to cut it short, like how should we think about Q2 or maybe Q3 margins from these Q1 orders given the price-cost dynamics?

So, Akash, I'm happy to take this one, right? So, I mean, it's essentially the essence of the price increase sort of, you know, in this what I described as the HR pricing forward looking to actually, you know, cover the price increases that we at this point in time are looking at to sort of, you know, keep our margins, right, and not take a margin hit. from potential price increases. So therefore, from today's perspective, from what we have seen, right, you know, we have not yet seen material effects in the first quarter yet, right, in the sense that we already see, you know, effects on our cost base, but we expect that it's going to happen. And therefore, we have increased the prices. So when costs will hit us through, you know, material costs, energy costs coming up, our price increases that we have put in place should also hit us in a positive sense, right? Because by then, sort of, you know, the orders giving, again, an order book of three to four months there will turn into revenue, right?

So... Actually, as long as we're on that one, I'd point out to you that we had a lot of talk about pricing and costs in 22, 23, where Kian was forced to be reactive in putting up pricing after the cost had already come into the picture substantially. And I'm really pleased with our business's proactivity and embracing the long-term embracing of the agility on the commercials and the operations. Very good teamwork between our supply chain team and finance team and business team to project what could be the case. and proactively, in advance, adjust the pricing. And we've got the whole supply chain and operations team working hard to mitigate the cost impacts coming towards us. So I think that we're nicely ahead of the game now, and it feels real good to be proactive on these things.

Thank you. So can we say that your ITS backlog margins are not really far off from what they were three months ago at the end of the year?

That, I think, is a fair statement, Akash.

Okay. And then my second one is on IAS. I mean, if you look at your service revenues here, they were down almost 10% year-on-year to $286 million, which I think in absolute terms is the lowest since first quarter of 2024. Can you talk about what's driving that? And maybe a follow-up, when we look at your e-commerce order pipeline, is there anything to highlight there? Thank you.

So, to take the... Year-in-year comparison right on the in the service sector item at Fort in prior year. We actually had Like I said in my commentary in the first quarter right yet sort of at one time a spare parts stocking event from a Major customer that happened in that quarter, right? So that is if you will have one time in a particular quarter and And also we commented last year we actually had a very strong quarter in terms of modifications and upgrades. That is a continuously good business, but it was exceptionally strong also in the first quarter last year. And if you would go to the brand script, you probably will see that we have commented on 100% increase year on year in the first quarter last year in the mods and upgrades, right? calls out sort of, you know, that one in terms of comps, yeah. But we continue to be positive about the development of the service on IAS, yeah.

We now have a question from the line of Tor Fangman from Bank of America. Please go ahead.

Good afternoon. Hi, Christa. Hi, Rob. Two questions from my side. First question would be your competitor has profit more last week and was flagging very intense competition and price pressure as well. So we'd just like to hear from your side. How do you view the incremental? Is there even an incremental pickup in competition? And also thinking about competition from China, just what is the market picture right now? Thank you.

Sure, Tor. I appreciate your question. You know, we have an extremely strong footprint in China. It's a home game for us. And we're able to leverage that strength to benefit all of our regional performances in China, for China, in China, to benefit our businesses in Europe and the Americas too. So I think that's a very unique and important element of our business model and certainly helps us be very good and competitive in our pricing. As I say, we only put them up 3% on the 6th of April, and we see people acting rationally. And there's always competition in the market, but we don't see it particularly intensifying vis-a-vis this time versus previous times.

And sorry, happy to have you back, actually. One maybe point to add here, you know, in 2022, inflation was basically a European phenomenon. This time, this is energy cost-driven, which is actually a global phenomenon, right? So that's also in terms of, you know, relative also for, you know, what to be expected kind of pricing development. This time inflation will actually hit everybody.

Thank you. Very, very well understood. And then my second question would be on the profit outlook for IAS and just generally what you think can you deliver basically throughout the year should we see further sequential step-ups? And together with this, we had a recent change in section 232 tariffs and now also including Canada and Mexico. And I know you have the facility in Monterey. So, could you just comment on are all these prices covered by your price increase clauses? Does this have any effect on margins or on demand in the segment? Thank you.

Yeah, sorry. So, on the outlook first, right, and so that, you know, the step up to the midpoint of the outlook and the outlook overall, right, Like we said before, I think it's exactly the same drivers that are in place there as well. And you can remind everybody on those, right? But within the year, it's particularly, you know, we're working through the legacy project. We've closed in the first quarter. We continue to close, and that will have a contribution throughout the year. just as, you know, the development of the service business and the execution of the projects, right? But we are looking forward to, you know, continue closing legacy projects as we speak throughout the year. And that will obviously have a positive contribution. Now, on the tariffs. You know, basically, also there, maybe as a reminder to everybody, I mean, everybody knows there is these two sorts of tariffs, right? There is the one with this strange acronym, you know, but everybody calls them the reciprocal tariffs, right? And that's the one that were affected also by the recent verdict from the U.S. Supreme Court. And then there's the Section 232, which were not affected by that particular ruling. So, our guidance that we have put out or the outlook that we have put out at the end of February and that we are confirming right now is including, you know, the effects that we have seen, you know, from those two types of tariffs in our IES business and also in our IES business as far as North America is concerned. Now, what has changed now, right, the one thing is, you know, the reciprocal tariffs sort of, you know, taken up or removed from the U.S. Supreme Court, and obviously we have filed for a refunding as far as we think the refunding belongs to us. That is a recent process. On the other hand, you know, the Section 232 methodology has adapted a bit, so it has broadened the base for the tariff, and sort of, you know, we are looking at a low double-digit amount for a potential refund following the ruling from the Supreme Court. But at the same time, we're also looking at the low to mid-single-digit incremental effect that we see from the changed ruling on Section 232. So very long story short, that's basically a wash as we are looking at it right now. and therefore we feel with the guidance and the outlook we have put out in February that that's well covered.

Thank you so much. Have a good day.

We now have a question from the line of Lucas Ferroni for Jeffrey. Please go ahead.

Thanks for taking my question. I just wanted to come back on the start from Sven regarding the pre-buy. Can you talk around maybe what you've seen into a proposed price increase? Was it really a pre-buy and so then there's a bit of normalization or was it maybe just a better demand than what you expected? How can you kind of differentiate? Thank you.

Hey, Luca. So let's talk about that. As I said, we put up, we announced in March a 3% price increase that will be effective, that was going to become effective on the 6th of April. Last time we did a first quarter price increase back in 2022 and there was a substantial effect, we had put it up, my recollection was high single digits, almost 9%, 10%. There was a substantial pre-buy effect back then, but that was a good four years back or more. It was only 3% this time. We put it in place for the 6th of April. There maybe was more pre-buy than we anticipated when we had our pre-close call, but there still was a certain amount of pre-buy effect. How much, we're still in the process of figuring that out. And we'll only know as we look at how it really comes back, you know, how the orders are coming in April and May. The point I guess I would get to is with the pre-buy effect that we saw, maybe the usual quarter distribution where Q2 is often larger than Q1 in past times, maybe it might adjust the quarterly progression during the course of this year and As I say, we'll have a feel for how much that pre-buy is as we get through the next weeks and get through the month of May and have a view. But it wasn't massive, but it wasn't marginal either. It was a little more than we thought it might be. And how much, we'll see as we get through May. Does that help you?

Yep, thank you, very clear. And then on the IAS, the order intake, I think also in Q1 it's relatively better than maybe what we saw at the pre-close. So wondering a little bit if maybe things finished the quarter a bit better than expected from kind of things falling maybe this quarter or roughly 9 with what you had in mind. It just seemed that the pre-close that we didn't expect this type of growth in that segment. Thank you. In orders.

So I think we feel we said that actually also in the brief was called indicating high double-digit growth, right? And so I think that's in line with how we talked about that.

Okay, perfect. And the last point was just on the M&A. There's a part of the kind of free cash flow that is set aside for that. I was wondering if and that strategic investment that was made, I mean, some of that money was kind of used as part of that, or that $200 million is set for something different?

Thank you. So, yes, again, also to remind everybody, we said in the outlook for the free cash flow that about $200 million are here marked for MLA activity throughout 2026. Now, actually, you know, in the first quarter as such, you know, following the closing of transaction, only a very small amount of that has actually been used. The SQL Robotics transaction that Rob made a reference to earlier is actually, has actually closed in April, right? So, in that sense, it's not in the first quarter cash flow. but the deal is closed, right, and the money has flown, right, and the equivalent, we have had an investment of 235 million renminbi, roughly 29 million euro, so that's an amount that is going against those 200 million that we have earmarked in the cash flow, in the outlook.

And I think it's a great example of what we told you we were interested in doing M&A on. Very strategically interesting software and robotics kind of companies where we see ourselves as a very logically good fit owner of that business and able to scale that business. It's a great example of exciting technology that fits very, very well into our overall solution and that we can scale on a worldwide basis.

Thank you.

I have a question from the line of Lossie Steuben with Barenburg. Please go ahead.

Hi, good afternoon. I have a question on IAS. Logging that this year seems to have been busier than prior years. At least that seems to be the anecdotal feeling. So, I mean, generally, what is... you know, what is the message you're getting from customers in terms of, you know, we've spoken a lot about, you know, hesitancy to invest and, you know, a lot of early conversations, but no one really pulling the trigger. So I'm just wondering what the key messaging was from customers at Logimap because it did seem to be a bit more upbeat than it did in prior years. And then the second question is to some extent related to that. I think in the Q4 call, you talked about the need for, I think you said, win and do orders. if I remember correctly, particularly in the context of reaching that kind of 4 billion euro revenues in 27. Have you seen any signs of some of those maybe coming through, maybe also since Logimat, or what's the update on that front? Thank you.

Yeah, Lasse, you're right. There was good resonance at the Logimat. There was, the week after, a real good resonance at the MODEX in Atlanta following the Modex in Atlanta followed the Mogi Mat in Stuttgart. Good resonance and good customer feedback in both. Good sentiment. I think that the quote that you're talking about was actually multiple quarters ago and back earlier last year when we were talking about customers being quite hesitant about starting brand new big projects in the IAS business based on uncertainties and volatilities. We have updated that now and are saying that the trough in the market is behind us for both of our segments. Certainly in the IAS segment, customers across the patch in multiple verticals have been coming back to the table and pushing the button on starting those new orders. And so I think the trend you're describing is behind us now. For several quarters now, we've been calling that out. You can follow up with our IR team to get the detail of that timing. But that's behind us, and the stimulus, the resonance is good, and the customers are coming back and placing good orders now.

I'll take the other one on the win and do. So let me maybe clarify one point first. When we talk about win and do, we talk about the order intake that is translating into revenue in the year of the order intake, right? So that is on 2026, right? Because you made a reference to sort of $4 billion revenue. Actually, we have no outlook to have $4 billion revenue in 2026, just to clarify this. So when it comes to win and do, which is sort of, you know, order intake still to get for the revenue outlook that we have taken out, given out to the street, you know, it's actually, you know, a very small manageable amount of win and do that we expect to have in the second quarter with the order intake that we look at. with the order book and this small win and two still to get. I think we are covered actually, you know, for having, you know, the 2026 outlook there. And 2027, we'll talk when we talk 2027. That's all of us.

All right. Thank you.

We now have a question from the line of Timothy Lee from Barclays. Please go ahead.

Hi, thanks for taking my question. So my first question is about the price increase in IDS again. Can I just confirm, is the price increase of 3% similar for everybody in the street? And how about the Chinese players? Are they also making the price increase because of inflation this time? Also, in terms of competition, have you seen the Chinese players moving towards the higher end products? That means whether you are seeing a step up in terms of competition in the higher end products that used to be having a much better position?

Timothy, a little bit of difficulty hearing exactly on the line, but I think you asked if our 3% price increase applied to all our customers, and most certainly it does. Indeed, we increased the list price for all our customers in the ITS AMEA business, where we had the most concern about potential cost changes coming from inflation. We increased our pricing in China as well. We'll have one coming up very soon. The agility measures I'm talking about, we do on a worldwide basis. We've been adjusting pricing in North America as appropriate too. The 3% call-out was our ITS business here in Europe. But we are adjusting pricing as appropriate, like Christian was saying earlier, in all regions on a very regular basis. As opposed to commenting pricing by competitors, let me just say the market is acting very rationally, and competitors continue to act rationally. And Kion has a very strong footprint in China and has a very good offering in all the market ranges for our trucks. We do see as many industries in China are becoming, are bumping up against the growth limits that they'd like to have, they're looking externally. and are moving to other regions in the world, and I think that continues. And there's very good technology in China, and we take it very seriously and take our competition very seriously.

Thank you very much. Sorry, actually, I would like to clarify a little bit my question. I was actually wondering if your competitors are also making similar price increase of free to set as what you did, and also whether the Chinese players are also increasing the price this time.

Yeah, look, our observations looking into the market is that pricing is done on a rational basis. We were on a rational and proactive basis and took very good account of our own projections of expectations on inflation and potential impacts coming from the war in Iran. And on the basis of our expectations, we made the pricing change. But in terms of commenting, anybody else's... That's not our approach.

Understood. Thank you. And then my second question is about the margin development for IPS in the rest of the year. So in the first quarter, you have 9.1% margin, and the big time of the full year guide is 9.7%. So I'm just wondering what would be the key drivers for margin improvement further in the coming quarters, given that you have the price increase to offset the cost. you may have the utilization rate to improve in the second quarter because of this quarter, strong quarter in Q1, but then in Q3, because of the rebuy normalization in Q2, the utilization may probably drop a little bit in third quarter. So I'm just wondering what would be the moving part to help your margins to improve, let's say in the rest of the year, especially in the second half. Thank you.

So, let me start with the end first, right, because basically if you look at the margin development for the remainder of the year, we would sort of, you know, expect that as we go now into the next quarter, we would be sort of, you know, close to the level that we have seen in the first quarter. Third quarter is always a summer quarter, right? That has some implications in particular also when it comes to the service contribution to the business that is natural in the summer quarter. In our business, you know, in the IDS business, the fourth quarter always tends to be the strongest quarter in the margin. We don't think that 2026 will be different from that perspective. And so that already describes also the margin drivers because the one is the volume that is going through the system, which is a consequence of the order intake as it translates into revenue. And the other element is the services business in the various pieces, you know, and that sort of grows in the after sales segment, continuous growth in the rental business. at which we look. But also, you know, also in the idea segment, we do a fair amount of automation, right, that will also translate into revenue as we speak in the coming quarter. So all this will contribute. to the top line development and consequently also to a margin development that, again, to remind everybody, will be back-end loaded as it was also in prior periods where the fourth quarter is the strongest, and we expect that again.

Okay. Thank you.

The last question comes from the line of Felipe Lorraine with Bernstein. Please go ahead.

Thank you for taking my question. I'll start with one for Christian. Are you going to earmark in the balance sheet notes the exact amount, for instance, of financial liabilities, e.g., for instance, the bond that you've placed in Q1, and that is related to leasing and short-term rental activities because the disclosure so far in Q1 looks a little bit different, so I'm wondering about your end reporting. that will help to determine the industrial net operating debt levels by ourselves. And then the second question, more for Rob. If we speak about, for instance, players in the contract logistic space and take into account your former, at least, let's say, largest customer in IAS, Amazon, apparently these guys are also outsourcing some distribution centers and so on to contract logic players in North America now, which was a trend that was observed already in Europe. Would you expect this to have a material impact or not on your own business in that very special e-commerce vertical?

Thanks for the question on the bond and the use of the proceeds of the bond. Yes, we will disclose it in the context of the use of the funds, right? That's exactly why we have also together with the outlook set that there will be an adjustment to the free cash flow so that you can actually transparently see how the proceeds of the bond of 500 million have been used. And as that will happen, right, then you will also be able to see, you know, what to the extent that that is actually, you know, not, financial debt in the classical sense, as you made the reference to, but it's actually used for the leasing and rental business. So that disclosure will follow once we use the proceeds for the leasing and rental business.

Okay, perfect. And Philippe, on your question, we haven't seen any particular impact as of now. I would remind you that all those warehouses and distribution centers and cross-stock centers and fulfillment centers need first-class automation solutions in them, and need first-class automation solutions in them updated on a – once they're in Greenfield, they need to get the great solution in there in the first place, and that's a big piece of our contribution. And then over a period of time, they'll need some Brownfield upgrades too. And we do very good Green and Brownfield with – all the customers, and certainly the one that you're talking about, whether they're insourced or outsourced or resourced or it's all good automation solutions coming from Keyon. So, no, I don't think that that's an impactful trend, and I would encourage you not to be too concerned about that one.

Okay, perfect. Thanks for the clarification.

Ladies and gentlemen, In the interest of time, that was the last question. I would now like to turn the conference back over to Rob Smith for any closing remarks.

Thank you very much, Chloe. And ladies and gentlemen, thank you all for joining us for today's call and the many good questions. We look forward to continuing the dialogue with you and face-to-faces over the next weeks in the different conferences. And we'll look forward to being back here with our Q2 results at the end of July. Thanks very much, and have a good afternoon. Bye-bye.