Krones Ag Adr

Good afternoon and a warm welcome from my side. My name is Olaf Scholz, head of group investor relations here at Crohn's. In a macroeconomic environment marked by further uncertainties, Crohn's has confirmed the financial targets for 26 and also increased order intake and profitability in the first half year 26. This was the headline of the press release this morning. And now... Thomas Ricker for the first time in his role as CEO of Crohn's and Uta Anders will give you more details about the situation at Crohn's and also explain the figures of the first half year 26. After the presentation you will have the opportunity to ask questions. I think you also know how the Q&A session works here at Crohn's. Please use the function raise your hands in Teams or send me just a short email and then I will hand over to you. Additionally, Additionally, please be reminded that this meeting will not be recorded and that it is also not allowed to record the meeting. Please also deactivate any functions of recording at Teams. So I think let's start and so I will hand over to Thomas Ricker. Thomas, the floor is yours.

Thank you very much, Olaf. Dear ladies and gentlemen, It's really a pleasure for me for the first time in my new role as a CEO to present the half-year results 2026 of our company Crohn's together with my colleague Uta Anders. As I mentioned already in the Q1 call where I introduced myself, I'm very much looking forward to future direct exchange and close cooperation with the capital market and therefore with you. The current situation in the world is challenging. Thank you very much. Thank you very much. So I will just jump over this, summarize, because we will go in detail in the figures and in all these information afterwards. The highlights for the first half year in 2026, also in a nutshell, because we will go more deep in in the following presentation, water intake in totally at 2,850,000,000. The revenue grows plus 1.8%. EBITDA margin on a level of 10.8% and a free cash flow currently of minus 31 million. Going to the order intake, you have seen the figures. Even the second quarter was on a plus compared to the last year of around 3.5%. In a sum, in the first half year, the growth of the order intake was by plus 4.5%. And it's very important for us the book-to-bill ratio after the six months at the level of 1.05. In general, as I mentioned already, the uncertainties on the market are still on a high level. Despite that, we could manage it. And we have our global presence. We are more or less everywhere, and we are in close cooperation with our customers. to handle their projects in the best possible way. As you can also see, the strongest growth currently have been in North and South America, also in Eastern Europe. We have quite a stable situation on the water intake side in Europe and in Asia Pacific, and currently a bit of a decreasing water intake compared to last year in Middle East, which is quite explainable, and in China. and we are expecting a catch-up effect also in the second half of the year also in that regions. China in the first half year is always a bit influenced from the Chinese New Year, which is in February. So up to now, as said, we could manage the uncertainties and especially the huge cost pressure on the raw material side of our customers quite well. and the huge pressure on the cost side are mainly driven from the energy costs and these are strongly influenced from the current situation in the Near East in the Iranian war. The order backlog raised a bit up and we are still on a very good level of around 4.3 billion. The delivery times is stabilizing at really a very competitive level of around 30 weeks and the order backlog in combination with the order intake also from the first half ensures our production capacity utilization largely for the full year 2026. If we come to the revenue distribution, It's still a very good balance between the emerging markets and the developed markets. A bit driven now from the developed markets, 52% in that area and 48% in the emerging markets. What you can see here is that North and Central America dropped down last year because of the shock of the tariffs. It's catching up again. That's good. Also South America, I would say, is on a stable level if you see the absolute values. Europe and Middle East, following the order intake situation from last year, has a very strong development in the positive side. And the Eastern Europe, Central Asia, China, and Asia-Pacific regions are on a, I would say, stable and very good level from our revenue split. So far from my side, and then I would hand over to Uta.

Thank you, Thomas. I mean, as always, I will start with revenue development. I mean, as you can see, speaking about year to date, We are at 2.715 as reported and we have about 60 million FX effects included in here, mainly coming from the US dollars and FX adjusted as you can see 2.775 billion. This is the growth by 1.8%. As you may recall, we had 1.4 in the first quarter. So we have been catching up slightly to our 3 to 5% growth guidance, which I will come to in a second. Quarter over quarter, you can also see that we had a slight increase. And as I said, already in the quarter, about 10 million FX effects. I mentioned that already we confirm the guidance three to five percent for the current fiscal year we are very aware that the second half must be stronger than the first half in order to achieve that but we have also shown for instance last year that we are capable of delivering that and also the production schedule confirms that all our production sites or customer sites installation and permission schedules Backlog, but also recurring revenues. So that's why we are confident that we can confirm our growth guidance. Coming to EBITDA, you can see for the fiscal year today, 292.8 million EBITDA, which is a slight increase compared to last year. In absolute numbers, if I look at relative numbers, we increased by 0.2 percentage points. From 10.6 to 10.8. And this is true for the fiscal year to date, but the same is true for the quarter because also here we had 10.6% margin. Also here, we confirm our guidance 10.7 to 11.1% EBITDA margin range for 2026. EBT. 197.7 million you can see yourself it is a decrease compared to last year which is still kind of let's call it carry over effect from the first quarter because here we had negative financial results as well as higher depreciation you can see in the second quarter we have increased slightly our EBT but all in all also here this is in line with our expectations as we are also rising it on the lower end on the left side of the page. Moving on with personal and material expense, the picture is very similar to what we have presented already in the first quarter. Let's start with materially expense. I mean, you can see yourself, it is an absolute numbers decrease compared to last year, as well as in the ratio 45.1%, which is a result of the material cost reductions from last year. You may recall that we had also talked on the conferences about the cost agreements or the agreements we had done with our suppliers in 2025, which now carries through to 2026. And this is one reason, but also price levels. So those are the reasons for the low material cost ratio. We assume that this is going to be normalized a little bit throughout the fiscal year. The same is true for normalization, but also similarity to the first quarter for the personal cost ratio. I mean, you can see yourself 29 million in addition, which is the result of, on the one hand, an average higher FTE number, so employee number in comparison to the same period last year, but also tariffs or merit increases. 32.9%. As we have shown last year, we expect this to go down towards the most 30% throughout the fiscal year. Employees, actually, there's not a lot to tell this time. As you can see, we are at approximately the same level as we had end of the fiscal year, 21,249, 90 left. The reduction is mainly in Germany, but still the development and also if I look at the different employee groups, which we always highlighted, it is very similar to what we had. And also that is in line with our expectations. Now let's move on to the segments of filling and packaging technology. I always tell you it is in line with group development. I mean, because it is the largest segment. and speaking about revenue I mean 2293 reported 2342 FX adjusted and FX adjusted we show a growth of 1.8% which is already very close to our 2 to 4% growth guidance which we confirm and speaking about EBITDA margin you see a nice development also this quarter coming from 10.8 to 11.2% for year to date and also here we are within our guidance of 11 to 11.5% and we confirm both growth and EBITDA margin guidance. Process technology. Yeah, the story is very similar to what we had seen the last years, only limited growth, but good margin or very good margin. And if you look at the year-to-date numbers, you can see that both in FX adjusted, but also in reported numbers, we are below the last year, which is also related to delays of turnkey projects also in last year, but also at the beginning of this year. but higher or very good revenue in what we call units and components. I mean, pumps and valves, for instance, which is also the driver for the margin acceleration, the 10.6%, very similar to last year, above the guidance of 9% to 10%. To summarize it, we also here confirm the guidance, 0% to 5% growth and revenue growth in 9% to 10% EBITDA margins. Last but not least, Intranogistic, nice growth, 60 million reported figure, 6 million adjustment for FX, so we come to 9.7% revenue growth, FX adjusted, which is already on the upper end of the guidance. On the other hand, also due to mixed issues, there is still some way to go to achieve the EBITDA margin of 7.5% to 8.5%. We are only at 5.3%, but also here to summarize it, we confirm the guidance for both revenue growth and EBITDA margins. Ag Adr, Christoph Klenk, Bulent Bayraktar, Olaf Scholz, Ralf Goldbrunner, Roland Pokorny, Ingrid Reuschl and Free Credit Lines, as you can see, close to 900 million. So that gives us sufficient room to maneuver for the goals we are expecting towards 2020 e-targets also, but also for everything which is going around economic volatility. Equity, also here, life development, 64 million in addition equity, despite of the fact that we paid out 88.5 million dividends, so we had a net income this quarter of 139 million. If I look at the ratio, also there, life development up to 43.6, so 1.4 percentage points, and this is because equity increased by 3%, whereas the total assets and liabilities more or less stayed stable at 5%. 5 billion so up to 43.6 now let's come to working capital Starting first of all with the middle part of the page, I mean, as you can see yourself, 18.5%. So we are higher than we were last year. And also, if I look at absolute numbers, we are holding or we were holding end of June a working capital of 1117 billion Euro, which is an increase by 180 compared to end of last year, which, as we will see on the next slide, is the main driver for the free cash flow development. Let's look at the different components of working capital. Receiver with POC, I mean, you can see from relative numbers, but also from absolute numbers, very stable, 35, 36%, and it's about 2 billion in absolute terms. Payables, they increased a little bit compared to Q1, where we have highlighted that in particular, and we are very similar to where we were last year at the same time, and we have about 770 million accounts payables, lower than end of December, but that's also normal course of the business. Inventory, as you can see, and which we had already talked about in Q1, 13.5%, so it is higher. Two reasons. Reason number one, safety stock, as we have also highlighted in Q1 already. Reason number two is also a bit regional. We are holding a little bit more inventory in North America, also to be able to deliver out of North America. And that's one of the main reasons for that. And last but not least, received repayments. 15.8 so very similar to end of the fiscal year but much lower than last year at the same time and this is because and I had mentioned that already that with lower delivery times we are moving faster also the orders and then the down payments move from the liability side to the asset side so that all in all the overall development of working capital and as I said, it increased by 180 million and we can see the 180 million, 181.1 to be precise, also on the third line of the free cash flow statement for quarter two, not quarter two, year to date. Let's first of all look through the fiscal year. I mean, I already reported on EBT. You can read it. Other non-cash changes, mainly depreciation of about 90, 100 million. and change in working capital, I commented other assets and liabilities. This is mainly income tax payments, close to 60 million. And then moving on CapEx, that is a little bit different than last year. We are higher in CapEx this year than we were at the same time last year, 3.6%. And this is because we have quite some large investment projects which just pay out regularly. Other is not significant, free cash flow before M&A minus 30.8 and M&A activities 8 million, that's the earn out we paid out in the first half of the fiscal year. Financing activities, others, yeah, that's the dividend mainly, 88.5 million and then the change in cash as you can read and then coming to cash. And if I just shortly compare last year to this year, I want to highlight two things. The change comes mainly, the change in free cash flow, mainly from higher change in working capital, which we expect to normalize throughout the fiscal year and more capex. So those are the major changes. And now I will take a slight detour, slight detour, because I want to announce already something which we have closed in July. That's a small acquisition which we have done now in July. We are actually in the closing phase right now. It is a very small business. I mean, 10 million revenue. You can read it yourself. It's Vero Precision Tool Company. And this is in addition to our nets. Some of you may recall that we have talked about closing the loop. We have talked about advanced modding technologies as part of filling and packaging. So here they are producing modes and tools for special purpose caps. So it is closing a technology gap which we had in combination between MHT and NetStyle. Very small business, 10 million assets, 50 employees margin accretive. and you will see the payout in the third quarter of 2026. And then now let's go back to the presentation. This slide you also know, I mean, I talked about the negative free cash flow, but I also talked about that we expect this to normalize what the fiscal use of same information as I had given to you in the first quarter, but also Q4 2025. Rossi, 17.7%. They're very similar. You remember that I always talk about nominator and denominator. What we see here is that the EBIT only increased by 1.9% for the reasons also mentioned already when I talked about EBT and capital employed increased by 9.8%. We expect a certain normalization, in particular in working capital, but also an increase in EBIT. So that's why also here we expect to confirm our guidance for 2026, 19 to 20%. So far from my side, and now I hand over to Thomas again.

Thanks, Uta. And therefore, with all the figures shown, coming to the outlook, which we strongly confirm the guidance for 2026, Based on our order intake situation, on our backlog situation, and especially also based on the schedule for our production and for the projects we have already in hand for the rest of the year, and we confirm the revenue growth in the guidance for the revenue growth in the range of 3 to 5%, the EBTA margin in the range of 10.7% to 11.1%, and the ROSI in the range of 19%. The outlook on the segments as already mentioned from Uta for the revenue growth and already also confirmed, so I would not go in depth. You recognize that we have to have a stronger second half, which we confirm also that we are even in the segments fully in the guidance what we have placed for the 2026. And last but not least, also our mid-term targets for 2028 with a revenue around $7 billion on the revenue side in 2028, an EBTA margin in a range of 11% to 13%, and a ROSI bigger than 20% for the year of 2028. And also a strong confirmation for that, While saying that when we have set the targets in 2024, the global situation has been quite a bit different, I would say a bit easier. And that means that the whole Kronos team has to work even harder to get these targets for 26 and also for the midterm targets done. So the key takeaways, I think more or less done already. The start was quite good. The second half of the year will be stronger to come. On the group level and on the segment level in our expected guidances, there is for sure uncertainties on the market. Up to now, we managed it quite well, and this is our strong belief also for the future, for the second half. We have a good backlog. We have a good scheduled utilization of our factories, and therefore, the targets for this year will be, again, strongly confirmed. So far, in an overview about the figures and short explanations and we are looking forward to your questions.

Thanks to Thomas and thanks to Uta for the explanations of Q2 or first half year 26 and also regarding the outlook. I think there are some questions or I already see some in my email folder as well as in the Teams. We start with the Teams. We start with Sven Weyer from UBS. Sven, your questions please.

Yeah, thank you Olaf. Thanks for taking my questions. Good afternoon and welcome Mr. Ricker. All the best for the new role. The first question I have is on the order intake guidance, right? Because you confirmed the book table of slightly above one, which, you know, implies an order intake for the second half, maybe slightly above the level that you had in H1, which was a good level, especially in the first quarter. Now, you talked about, you know, prevailing uncertainties as a consequence of the Iran war, higher energy costs, which maybe caused some issues for some of your clients. I was just wondering, you know, if you could give us an update on the pipeline and, you know, how you feel about these book to build guides. That's the first one. Thank you.

Thank you very much. So, as I mentioned already, there is for sure a lot of uncertainties driven currently quite through the Iranian war and therefore through the energy costs, which has a direct influence on the raw material sides of our customers, which is definitely understandable and there is a lot of uncertainty because oil price and energy prices are Thank you for watching! It's still influencing, I would say, the decision behavior of our customers. That decision takes much longer, even that they have taken last year and the years before, as that is understandable. So I would say that's a bit also the uncertainty for us, but seeing the robust pipeline, seeing also the distribution of the pipeline around the world with a very good distribution, very good balance, we are, I would say, very optimistic that we can manage the order intake side and therefore then also the growth side.

Did you also have a good start into July so that gives you also comfort on orders?

The July figures up to now confirming my statement from right now.

Yes. Thank you. And then I was just wondering, I think my understanding is that in order to achieve the full year revenue guidance, you also still need to get some order intake. In the second half for this year delivery, if that's right. And I was just wondering, you know, the amount of orders that you need, is that around about the same level that you had in the second half last year? Or how should we look at this in for out orders?

We are quite good utilized at the moment, and yes, there is a chance for single machines and for some new machineries also to be already delivered in this year. Especially on the service side, we have still a longer chance to get orders in, which we also can then deliver and make to revenue this year. I would say from that side, very satisfied with our statement for this year. A bit of an uncertainty also coming from customers, because we have also deviations in their projects. Ingrid Reuschl

You know, you can still end up also at the high end.

We are more comfortable towards the lower end.

Okay. I'm going to switch. I go back in the queue. Thank you both. Thank you.

Thanks to Sven. Well, I switched to my email folder and I see also there's someone, Benjamin Thielmann from Bernstein. Benjamin, welcome back. Your questions, please.

Yeah, hello, good to be back. And hi Thomas, welcome from my side as well. Three questions, if I may. First question, you mentioned it on one of the slides, is the solid order growth in North America. And I was just wondering, where exactly is that coming from? I mean, we know the story, installed base in North America, especially in the US, is relatively old. Are you growing there particularly because of a replacement of old machines? or are you growing with new customers or is it a mix of both? Thank you. That's the first question.

Okay. So first of all, to answer, yes, it's a mix of both and the explanations we discussed a lot of times and I would not say it's a kind of catch-up effect already. I would say it's coming a bit back to normality and the reason for that, at least that's my explanation, is that it's a bit more certainty on the tariff situation since a few weeks or months So it's not going up and down, and that might be the reason that one or the other customers are placing even more orders. Tariff situation is more or less unchanged up to now, and that might lead to a bit of a certainty on the customer side. But again, it's not on a level what has been already, but you have seen the drop down in revenue and also in order intake last year, and I would say we are on a good way back. So hopefully it stays like that.

Okay, very clear. And then next question would be, you mentioned it as well, that some customers could be hesitant in terms of investment behavior. I mean, the CapEx outlook for most of your big customers still looks good. I mean, Q2 order intake was, I think, the strongest Q2 since, I think, 2020. So it's clearly going well for you guys. I was just wondering in what regions or for what different types of lines and machines have you seen customers being reluctant to spend? Anything surprising maybe in Asia-Pacific?

As I mentioned before, I think Asia-Pacific is quite stable, including then also China if we did that together. Not really surprising, maybe a bit surprising is that still the European region at all stays on a very good level, also on a good investment level. As mentioned, NIO is dropping down a bit, but also the expectation because of the crisis situation in that region was from our side even a bit higher, so they keep it quite on an expected level. And as mentioned already, in the Americas, means North Central and also South America, we have A quite a strong situation on the water intake, which is, let me say, supporting our overall good figure and good growth compared to last year.

Okay. Okay, cool. And then, last question, if I may, is regarding the working capital movements, we have seen, Uta, you mentioned it, the M&T 2.0 went up by, I think it was 100 bps, because of a build-up of safety stock in North America. What is the reason for that? You mentioned that you want to serve more from North America. Is this from North America to the North American market? Or why is that what I perceive to be a sudden increase in energy over here?

It's what you said. It's from North America for North America to avoid the tariffs. So we probably have said last year when we talked about the mitigation measures for tariffs, One of the measures we mentioned is more local production, but also more local sourcing. And this is now reflected in the working capital, actually in the inventory. So local for local is the main reason for that.

Okay, cool. I have a few more questions, but I go back into the queue and I come back in a few minutes. Thank you.

Thanks to you, Ben. So, the next question is coming from Vitushan. Vitushan from Bada Europe. Your questions, please.

Hi. Good afternoon, everyone. Thank you for taking my question. I'm just bouncing back on the revenues. So, it seems like you said that you are comfortable with the lower end of your guidance for 2026. So, in H1 revenue growth, I just said for currency effect was around 1.8% and for the three-year guidance, it remains at 3.5%. So at least, I mean, 4% of growth. So how much of that acceleration is already secured by the existing production schedule and confirmed by the customer delivery dates and Also, I wanted to know how much still depends on the project execution piece.

I mean, I relate a little bit to what Thomas said earlier. So first of all, of course, we have LCS business, so service, spare parts, et cetera, where it's more or less in for out. So that's not secured, but also there we are confident. When we talk about, when we look at the line business, what we call new machine, most of it is secured. There is, as Thomas said, a new machine, not new machine, single machines, which we can Thank you very much. Thank you. And just on the intralogistic business, so revenue increased and we have a PTA margin which declined sharply.

So could you please elaborate on that momentum and also what's going to change compared to the first half to meet the guidance and targets within the segment?

Also, I mean here, I mean we always see the word mix here. I know that this sounds very easy, let's put it very simply, let's put it this way. But it is to a certain extent mixed. I mean, we are generating recurring revenue from service. That's one hand. On the other hand, new machine business also has different profitabilities, depending also upon what kind of line it is, where it is delivered from. And so in the first half of the fiscal year, it was rather lower margins. Yeah.

but I mean as as expected and in the second half we expect to accelerate then also if we look at higher margins which is also confirmed by the backlog quality okay thank you and just a last question please so in maintaining both your folio 26 guidance and also the 2028 strategy targets so I mean What duration and intensity of the current geopolitical conflicts have you embedded in your assumptions? At what point will the prolonged disruptions to supply chains, material availability, require you to reassess either the near-term outlook or the 2028 target, please?

I mean, we have done the guidance or the 2028 targets back in 2024. And back in 2024, we had a completely different situation. However, what we see, if we look at overall sentiment and overall growth drivers, they are intact. You know, beverage consumptions, and everything which we see there. So there is an opportunity to achieve it, but it is much harder than it was in 2024 because we have all these additional conflicts which, to answer your question, we, to that extent, had not included when we set the targets for 2028.

Okay, well, thanks. So I'll get back into the queue. Thanks a lot.

Thank you. So thanks to Vito Schan. Next question is coming from Adrian Peel from Udo. Hello Adrian, your question is please.

Yes, hi everyone. Actually, I've got also a few, but I start with three questions. First of all, on the point, Uta, what you said with respect to the lower material costs coming from 2025, I was just wondering, are you continuing with some measures? I mean, probably you do this on an ongoing basis, but are there specific projects you can mention to continue to lower material costs? Because on the other hand, it looks like that you're doing quite a good job here, but at the same time, we have the issue of personnel expenses keep growing. And so there's just a compensation maybe, but not really And then the second question is, I would phrase actually the regional questions that have been asked a bit differently. Because when I look at the implicit Q2 China and Asia revenues, I mean, growth wise, they have been quite up substantially. However, I was just wondering if that was just a function of the low base that you had last year in Q2? Or is this kind of a start of, let's say, more demand coming through in that region? And then maybe a question, the third one, is kind of a broader update on Netstal. My feeling was that the performance not been great recently, but maybe you could give us an update on How the asset as part of the group has performed so far and what do you see going forward?

Let me start with material and personal cost. Yes, you are right. We are benefiting from the lower material cost ratio. And you have asked for specific measures we have taken. So I would not call them specific or measures we have taken. It's put this way. It's just the normal bargaining power we also have. I mean, we are usually doing, not usually, we are doing in summer price negotiations with our suppliers. So this is what we are benefiting from. We have also closed some hedging contracts, for instance, for copper. We talked about that already. And this is where we are participating or benefiting from in 2026. and but also to a certain extent it's also mixed but you know it's mostly the good development in material costs which we see in the actual Personal cost, I mean, as I said, I expect this to go down further to 30%, to around 30%, as we had seen also last year, because we are accelerating revenue, and also we had seen or we had said that when it comes to employee development, The time of the large increases for FTE is over for Crohn's because we need to generate the efficiency out of the existing head count. So this is how I would phrase your question on material and personal.

To your question about the region, so I would like to give you the answer. So as I said, I think it's currently quite stable in that region, which is in my opinion a success because you know that Thank you very much.

And if I may start with next time, maybe you add then what I said. I mean, we have talked about that on the conferences also. I would differentiate it into three buckets. First of all, cooperation is great. So, I mean, it's very good fit from a cultural point of view and also from how we drive business. So that's very good. The second I want to say is, yes, the injection molding market is much more, not difficult is the wrong word, but much more under pressure now than we had assumed three years ago or three and a half now when we have closed the transaction for NetStyle. So that means the overall order intake for EMT for NetStyle is not on the level which we had expected. Also, you may recall that we have talked also about that a big chunk of the volume goals we had forecasted was coming from North America and now delivering out of Switzerland. Thank you very much. Thomas can add is, of course, with lower volume, profitability is not on the level which we had expected. You may recall that two years ago we had said they will be on Crohn's margin level in 2026. No, they are not. They are diluting. They are diluting, but still the whole story, the equity story, which we had talked about, and also closing the PET loop is in tact.

Those are well said, I would say. I would also pick on U.S., which was for sure one of our big growth markets in that area, because Kronos had always quite well settled there. We have a lot of customer base there, and the situation currently is, in general, the whole injection market is under very high pressure at the moment, and especially in U.S. So that's the reason why maybe the growth actually is behind our On the other side, we are still continuing and we are finding the right solutions because it is what it is. We have to find solutions with either more localization or even with pushing more in the system. Thank you very much. Thank you very much.

I guess there's nothing to worry about. So that's in plan. CapEx you spend was in budget, I assume, so you can confirm that's all fine.

We confirm it, yes.

All right. Thank you. Thank you.

Thanks to Adrian. So next question coming from Lars von Kleffel from Deutsche Bank. Lars, welcome. Your questions, please. Yes.

From my side as well.

Thank you all the best in your new role. Two quick questions, if I may. As you said earlier...

Sorry, may I interrupt? Now it's better. Now it's better, I think. Yeah, thanks a lot.

Better now?

Now it's better, thank you.

Perfect. So first of all, Mr. Ricker, all the best in your new role and best wishes. As you said earlier, lead times have stabilized at around 30 weeks. which as far as I consider is below your target range of 40 to 50 or to 45 weeks. Is this a concern for you or are you comfortable with it as long as the book to bill ratio stays at around one or higher?

I would say that's not a concern. That's a good figure at the moment, very competitive in the market and gives us also a bit better certainty and also our customers because even the long lead times years ago or maybe even last year has brought another big question mark on our customer side for doing their investment. I think they can now justify quite well how their markets are developing and then they are placing an investment and then they have a range of, let me say, depends where it is, but around at least below 12 months from the point of order placement to first salary product or production on their side.

Understood. Thank you. And then if I remember correctly on the Q1 call, you mentioned that given rising input costs Kronis was internally discussing the scope, timing and mechanics of potential price increases for products which are scheduled for shipment this year. Could you provide us with an update on these thoughts?

Sorry, I did not, acoustical wise, I did not understand that. Yes, for sure. I think also that situation has stabilized. So especially on the freight and packaging side, I think this is a project individual calculation what we have and therefore working close together with our customers. But in the end of the day, the price increases there have to be paid from our customers. In totally, we are still focusing a lot on, as we call it, our pricing strategy and the pricing discipline, which is also necessary also with the changes Are these questions from your side? We didn't hear you.

Okay, take your time. You can come back in the question later. I think next question is coming from Konstantin Hesse from Jefferies.

Thank you very much for taking my question. I've got only a couple left. I'm just trying to understand a little bit better. So this medium-term target of 28, it feels to me that it's probably, it feels to me rather that the base case, Thank you very much. but it feels to me that we might actually see potentially a cut in that target coming up. So I'm just wondering what gives you still the confidence to take you there? And the second question is if you could just remind us again on the ramp up of the new capacities, when do these come online? Thanks.

So, I mean, target is 2028. I mean, you may remember that I had always said it's about two handful of measures. If I look at those individual measures, the one where we have a question mark is next time. Yes, for the reasons I said. I mean, if we don't get the orders out of the US, then there is a question. There is an impact. Let's put it this way. There is an impact. and everything else. And you remember the story that we had India. Yeah, we need to have the capacity from India for local production. We are on schedule there to achieve that. To answer to your second question, also China. I mean, we will open that plant and then also come into production very shortly. in the fourth quarter of 2026. So that is also ongoing. I mean, you remember the installed base we had talked about. So also there is good development, process technology and infralogistics being the major driver. Of course, we need to have the order intake in those two segments. Infralogistics is developing well. Process technology had done also in the first quarter. Second was more stable. Let's put it this way, not extraordinarily stable. But those are very important to achieve our targets. So that's why, yes, there are, if we're not calling it question marks, that would probably be too negative. Yes, there are impacts which we had not seen back in 2024, but on the other hand, I would not take them back right now.

Understood.

And also, if I just may add, because I always forget that, because it has been already some time ago, FX also played a role. I mean, you remember last year we have lost more than 100 or about 100 million just in FX. So that also played a role. And so that's why, I mean, the quote. Yeah.

No, no, absolutely. I mean, obviously, effect has come down quite substantially again. So the question is, where does it end the year, clearly.

And it's a challenge, Konstantin. It's a challenge, yes. But we have a chance to achieve it.

Okay, so just to clarify, so China Q4-26, India mid-27, is that correct?

Opening also is in 26, but then coming... Oh, now I hand over to you.

No, but we will say the same. India is a bit different because it's a new plant. In China, it's an extension, so we are quite more on, let me say, productivity. India will take a bit longer to... train the people to get the supplier based on NNN so I would say opening up also in India is in the Q3 26 already until we have let me say the positive effect out of it it will for sure take in 2027 whilst the new plant in China is more or less productive from the first day of opening.

Okay so all of that is running smoothly so obviously another question mark as you said Uta is on Nechtel so if I look at Nechtel I think back in 23, revenue was something around over 200 million euros. So can you give us a rough indication of that potential gap of orders that are basically biding that question mark, just to get a feeling for what's missing to get you to that 7 billion?

Sorry, I'm just calculating because we don't have all the numbers.

I would say you are more or less right with the volume you mentioned and I would say it's substantial. The good thing is also that there is a really good pipeline but also let me say that currently energy costs influence on the plastic raw material costs and PET costs is for sure also Not a driver for the release of investments on our customer side. So again, there the market is quite stable. Our, I would say, market utilization and our sales network all around the world will help us. And we try to catch up, but I would call it substantially.

It's substantially in the current situation already, plus we had planned growth. Hmm.

It's substantial in the view of national, right? So if I look at that 7 billion target, and obviously, fine. So a potential cut wouldn't be a massive cut, basically. So we'd be looking at something in the few hundreds of millions of a cut.

Not on a group level, you are right. Understood.

Okay, thank you.

Okay, Konstantin, thanks a lot. I see Benjamin again in the questionnaire. from Bernstein. Benjamin, your second question?

Yes, thank you, Olaf. Two more questions from me, if I may. Again, on that style. I remember back then when you acquired it, you said margins... I remember it was something around like 10 to 20 bits on your backend group margin. Now, with volumes or intake being the lower expectations, I think, Uta, you mentioned it before, it is still margin diluted compared to the standalone business. Has that margin dilution then basically, is it still margin dilutive? That's the first question. And the second is, it is. Okay.

It has increased than it is. The margin dilution has increased a bit.

Alright. And then maybe one more question on the service business. I know you don't give a split between new machine and services, but I remember back then at the CMD, I think it was in Ingrid Reuschl Thank you very much.

But it's more or less also a linear growth than on the service side.

Okay. All right. Perfect. That's it from my side. Thank you, everyone.

Thank you. Thanks to you, Ben. I think the next question is coming from Christoph Bleever from B&B Baribas. Christoph, your questions, please.

Thank you for taking my questions. A couple of follow-up questions, please. The first one is on order intake. I'm struggling a little bit to understand why you highlighted rising uncertainty and delayed decision-making from your customers while reiterating the book-to-bill guidance for 2016. I just want to face a little bit different expression. Do you feel comfortable with the current consensus expectations indicating 4% year-over-year growth in order intake for the third quarter?

So first, maybe a second question. Yes, I'm absolutely confident with that. And the first question is, yes, I would say seeing the market potentials and seeing the project pipeline we have, and comparing that with the past, there might be even higher chances to get the water intake up. So it means we have to fight even harder. And this is, in my experience, the reason that the discussion time, the final decision time on our customer side, and as I mentioned already, understandable because of their pressures, either regional-wise, either crisis-wise or either cost-wise, Very clear, thank you. The second question is on pricing.

Have you already started to increase pricing to smooth input cost inflation? And can you give us some indication about potential price increases on the new machinery side?

So with pricing, I would first of all start that even all in the past, we are in a very competitive market. So we have, I would say, Very good transparency on our cost situation and therefore also on the pricing. We have a lot of efficiency measures in place to at least cover some cost increases on our side. And on the other side, your question, I think we balance what we see for the future. And the future is for sure when we deliver machines and when we are doing the services, which is around six to ten months in advance. and therefore we have it also integrated in the pricing but up to now that's only slightly changes but the slightly changes lead to that that we can confirm our guidances on the other side our financial targets we have set for 26 and the following years Can you remind us when those hedges for some metals expire?

Oh We need to take that question away. But they also revolve. I mean, let's put it this way. I would answer it this way. I mean, I don't have the exact, but we are revolving it. And I also don't have the term in my mind. I think it's a year, but we are constantly revolving it.

Okay, this is clear. The last question is, can you share what is your best estimate Your best estimate for the FX impact on revenues if we assume stable FX rate for the remainder of the year? What is the effect on revenue growth in terms of basis points?

Yeah, I mean, if I look at, we had in the first quarter, we had 51 million. Now in the second quarter, we had 9 million or so because it's mainly coming from the US dollar. I mean, I don't have a crystal ball to say it first because there are very different assumptions also from the banks on US dollar rates. But our expectation is that the impact in the second half of the fiscal year will be lower than they had been in the first half of the fiscal year. That's our expectation currently or our assumption currently for our planning.

Thanks a lot. Thanks a lot to Christoph. I see Adrian Pihl from Autoview still has some questions.

Yes, I've got two very quick ones. Actually, one on process technology. I mean, just thinking about the trajectory on the top line for this division, I mean, how can you... support this segment to return to visible growth? Do we have to increase the scope of offerings? Is it M&A that you need? Maybe some clarity on the developments and how do you see it going forward would be helpful. Obviously, I guess this is still linked to a bit difficult situation on the brewery side. But having said M&A, I was just wondering if you could give us an update in general on your So I would start with a question about the process technology. So the way forward is definitely planned with organic growth.

So as you might know, we had a huge transformation already on the process side from, let me say, former times, very strong link on the jewelry technology. In the meantime, also development in new areas, in new markets, in new fields, in alternative foods, in proteins and all that things. And this is especially that year with a very strong water intake or with a very strong start in the year is paying off right now so brewery as you mentioned is still on a I would say weak level and we don't expect a big growth coming of breweries because alcohol and beer consumption globally is reduced also for the next year in the forecast so this is our clear focus and this is also the look back to our current water intake also the visible projects we have already in hands which is because of the mix also completely different schedule times in the projects give us the confidence that we first of all will catch our guidance this year and then we'll follow up also with a higher growth rate also on the volume side whilst and that's also very important keep the profitability M&A? We are M&A in totally As you know, we are always open to increase our competitiveness, either on the technological side, on the other side, maybe also of market access and so on. There is currently nothing substantially in the pipeline. There is a few targets we have, we follow up, but no even substantial contribution to the guidances or to the targeted targets.

All right, thank you all, and Thomas, best of luck in your new role.

Thank you very much.

Thank you.

Thanks to you, Adrian. Well, I have a look on my email folder. I don't see any additional questions there. I also ask you in the community, if you have further questions, please raise your hands. Well, I think we are coming to an end to our Q&A session and also to our call.

Perhaps last words from your side, if you like. So I would say everything said. So from my side, first of all, thanks a lot for your good wishes, which I take personally, but I especially will give it to my team and to the whole Groners employees all around the world. As you see already, the Groners, Thank you very much. Thank you. Now we will close the conference call. Thanks a lot. Bye for now. Goodbye.