Sfs Group Ag

Thank you very much. Good morning, everyone, and thank you for joining us today for the presentation of the SFS Group Half Year Results 2026. Volker Dossmann and I are pleased to present the SFS Group Results today. Before we start, please note that this conference is being recorded automatically. The presentations, as well as the half year report itself, are available online at sfs.com in the download section. The first six months of this year were shaped by ongoing upheavals in the market environment and disrupted supply chains. Despite these challenges, SFS delivered strong progress. Our local-for-local approach, diversified positioning across end markets and regions, and our focus on mission-critical applications once again proved to be strengths. At the same time, we continue to implement the program to streamline our global production and distribution network. This program is designed to sharpen our focus on core activities, align capacities with market demand, and strengthen profitability over the mid-term. Let me briefly guide you through today's agenda. In the next 40 minutes, Volker and I will walk you through the highlights of the first half year 2026. I will start with a short reminder of how SFS is positioned and how we create value for our customers, followed by taking you through the key takeaways of the first half 2026. Volker will then present the key financial figures, the development of the segments and our guidance for 2026. After that, we'll be happy to take your questions. I will start with the positioning of SFS. SFS is by your side 24 hours a day, seven days a week, often without being noticed. Our products provide reliable support in everyday life. They are seamlessly integrated into customers' applications, but they often fulfill mission-critical functions. Better people use a smartphone in the morning, make coffee, drive to work, board a plane, work with electronic devices, enter modern buildings, or benefit from medical treatment. SFS solutions are often part of these applications. Our precision components, fastening solutions, and tools contribute to reliability, safety, and performance in a wide range. of End Markets. What all these products and services have in common is our value proposition, inventing success together. In many cases, the direct cost of our products represents only a small share of the total cost of our customers' products or processes. The real value lies in improving the overall application. Through value engineering, we help customers improve performance, reduce complexity, and create measurable added value. We do this as value creators in three segments. Engineered components focuses on highly precise customer-specific components and assemblies. Fastening systems develops and markets application-specific fastening solutions for the construction industry. Distribution and Logistics provides tools, fasteners, and Z-part management solutions for industrial manufacturing customers. Many of the products developed by SFS are invisible to the end user, but they are essential for the safety, functionality, and performance of the final application, like in here in this aerospace examples. Examples include cabin assemblies, Assemble Solutions, Injection Molding Applications and Aerospace Fasteners. These products require high precision, deep application know-how and close customer collaboration from the development phase through to serial production. In addition to organic growth, we continue to pursue targeted acquisitions that strengthen our technology portfolio and Market Access. A recent example is Heartland Precision Fasteners in the United States. Heartland is a US-based manufacturer of high-grade fasteners for aircraft structures and propulsion systems. The company generated sales of around $30 million in 2025 and employs around 70 employees. This acquisition expands our aerospace portfolio and activities gives us access to key US customers, including Boeing, and support the buildup of global manufacturing platform for the aerospace market. The acquisition was signed after the balance sheet date on July 9th, with closing expected by the end of September 2026. In the fastening system segment, SFS combines products, tools, and digital engineering solutions into integrated fastening systems. Our approach is not limited to supplying the fastener itself. We aim to optimize the entire fastening process. This includes the fastening element, the installation tool, and calculation software that supports the correct application of the solution. By combining these elements, we improve reliability, productivity, and efficiency for our customers in the construction industry. Another example of a targeted acquisition is Harald Zahn GmbH. Harald Zahn is a leading supplier of fastening systems for flat roof based in Germany and serving customers in Germany and Austria. The company generated sales of around 8 million Euro in 2025 and employs around 45 employees. This acquisition strengthens our market access in Germany and Austria, expands our range of flat roof services and opens additional international growth potential for existing products and solutions. In the distribution and logistics segment, we provide the ecosystem for industrial production. Our customers are industrial manufacturers, especially metalworking, and they are mainly located in Europe. The segment offers a curated portfolio of high quality cutting and hand tools, workshop equipment, and Personal Protection Equipment. At the same time, we offer one-stop shopping solutions and process optimization for industrial manufacturing. In other words, we supply everything around the industrial workplace. This combination of product range, process know-how and service creates clear value for our customers. Also in distribution logistics, acquisitions play an important role in strengthening our platform. The acquisitions of Goethe, Oldtorge, Perschman will further internationalize the trading business, extend direct market access in Europe, and create synergies. Together, these partner companies represent an increase of sales of around €130 million for SFS. In addition, the acquisition of Jelly Piper, now renamed Hoffmann Additive Manufacturing, expands our technology offering in industrial 3D printing and strengthens our position in the trading business. Looking ahead, we continue to focus on our main strengths and opportunities. Our priorities remain disciplined strategy execution, benefiting from relevant megatrends, strengthening our local for local footprint, focusing on technology and maintaining solid financing. These priorities support our long-term growth and profitability ambitions. I continue with the key takeaways of the first half year 2026. The first half year 2026 was shaped by ongoing upheavals and disrupted supply chains. Our local for local approach helped mitigate the effects of supply bottlenecks on our business areas and then again demonstrated the resilience of our strategy and business model. SFS generated sales of 1.559 billion Swiss franc corresponding to growth of 1.3% compared to the first half of 2025. Currency effects slowed sales by minus 4.2% Organically, we achieved strong growth of 4%. Mixed effects and measures from the streamlining of the global production and distribution network had a positive impact on profitability, while implementation continues to generate non-recurring effects. Adjusted operating profit or adjusted EBIT came to 206 million Swiss franc, corresponding to an adjusted EBIT margin of 13.3%. Operating profit EBIT including non-recurring effects came to 211.2 million Swiss franc and an EBIT margin of 13.6%. SFS also continues to complement organic growth through strategic acquisitions and to strengthen its long-term positioning. The streamlining program is already having a visible positive impact on profitability. The program strengthens our focus on core activities, adjusts production capacities to market demand, improves the efficient use of our resources, and reduces complexity within the global site network. These measures support the achievement of our defined long-term growth and profitability targets. At the same time, the SFS strategy remains unchanged, especially our local for local approach. Overall, the program is expected to reduce sales by around 110 million Swiss franc and generate total one-off cost of approximately 75 million Swiss franc. In return, we expect a positive EBIT margin effect of around 0.8 percentage points by the end of 2027. Approximately 650 employees are affected by company sales, site closures, and transfers across Austria, the Czech Republic, Germany, Malaysia, Singapore, Switzerland, Turkey and the United States. The program is expected to be completed by the end of 2027. Now handing over to Volker for the presentation of the key financials.

Thank you very much Jens and good morning. Welcome from my side to everybody. As we go into the financials, as said, overall, the Group achieved sales of 1.59 billion Swiss francs, which translates into a reported growth of 1.3%. However, we have been held back by the continued appreciation of the Swiss franc to the tune of 64.8 million during the first half year, which represents minus 4.2%, as said, which was mainly driven by the depreciation of the Euro and the US dollar. We may show a very strong growth of 5.5% in local currency against our guidance of the 3 to 6%. We are in the upper end. Organically, we've grown 4% whilst M&A activities including the deconsolidation of the sold entities have added 1.5%. M&A activities included the acquisition of the partner businesses Goethe, Altroger Perschmann, the Harald Zahn in Germany, 3D platform Jelly Pipe and effects from DB Fasteners in the US, which was acquired to the latter of last year. As well as the divestments carried out under the program to streamline the production distribution network, this is to be noted. Sales dynamics remain uneven from various angles. We have muted demand in Europe. We see persisting global geopolitical uncertainty. And with that, we do not point out yet consistent overall trend. However, we've seen unexpectedly strong Q2, extraordinary pattern in the electronics end market. particularly in the mobile phones business that shall change our delivery schedules towards the end of the year. It is expected that the usual Q4 pickup in mobile phones we've seen in past years will not materialize this year to the extent seen in prior years. We'll explain that a bit in more detail in segment engineered components, particularly the electronics end market saw a pickup, but on the other hand, we've also seen a good development in the industrial end market and here particularly aerospace, where we have captured possibilities in Europe. The mobile phone cycle did hold this year significantly longer than in past years and kept going into Q2. Normally, we would have seen ramp down in February, which would be the pattern. So this year is distinctively different. Additionally, we have seen solid development in higher hard disk drive components, enjoying the robust demand from the data center side. We expect this dynamic to to ease out mainly from the mobile phones. We look at the moderate demand for the coming months in that area. In fastening systems, we saw impacts from challenging market environments. The headwinds were largely offset by a pickup in volumes in the second half of Q2, as said. as well as from pricing effects resulting in the end in an organic growth of 1.2% in that area. Distribution and logistics shows organic growth of 1.5% supported by pricing initiatives. First, accretive effects of the acquisitions of the partners are visible, which have been consolidated as per the respective closing date during the first half year of 2026. With this backdrop, we may report good sales development in volatile environment. The team showed great dedication and loyalty, and we thank all of them for their contribution made. Looking into geographic end markets, we see that the geographic end markets show a slight pickup in Europe. We also see a continued shift towards Asia, which accounts for 14.4%, meanwhile, while the Americas remains up due to the US dollar effects described. The sales by industry is stable. Industrial manufacturing accounts for 27.5%, slightly above the prior year level. We maintained and even expanded our footprint in this industry despite the pronounced challenges in Central Europe. Automotive is further reduced slightly while construction is affected by the weak dollar. Operating profitability, we reported just debits of 206 million or 13.3% of sales, EBITDA of 273.7 million or 17.6% of sales for the first half year of 26. These indicators are adjusted for non-recurring effects related to the program to streamline our production and distribution network. The streamlining program we announced with our half-year results 2025 are well on track. We see first positive effects. Our personnel expense ratio declined by 1.1 percentage points. Our operating expense ratio improved by 0.4 percentage points respectively. Earnings per share is at 3.82 Swiss francs per share, which is an increase of 0.96 Swiss francs versus prior year. Earnings per share is mainly driven by the pickup in EBIT, which leads with EBIT levels, which includes minor effects from the program to streamline the production network. No major impact from financial result as that remains on priority levels. Tax expense raised nominally at stable tax rate during first half year. Going forward, we are confident to continuously show improvements in the net results. Networking Capital saw a significant increase versus prior year, primarily driven by the acquisitions and, first of all, by receivables. First, the consolidation effect from the partners' businesses added to receivables, 39.4 million in total. Secondly, we are seeing a strong growth in electronic business, contributing 25.4 million to the networking capital. Inventories increased as we had to honor outstanding supplier contracts from prior years in fastening systems, while also adding inventories from M&A activities. For the remainder of the year, we expect these positions to unwind and starting to normalize. CapEx in the first half of the year stood at 2.3% of sales, clearly below D&A of 4.2%. which is historically low level. This reflects the streamlining of the production and network and successfully increases the utilization of the installed capacity. Our more selective investment decisions showing effect, however, we expect the ratio to increase again as we remain committed to invest in growth-oriented innovative production facilities. while maintaining disciplined view on capacity utilization, we confirm our midterm CapEx range of 4% to 6% of sales. As a result of the effects described, and despite the networking capital additions, our free cash flow amounted to 121 million on prior year level, corresponding to an EBITDA conversion of 43.7%. This confirms our ability to generate cash while continuing to streamline our production and distribution network. Ongoing networking capital management, disciplined capex decisions and profitable growth remain the cornerstones of our decision making. We are well positioned to sustain strong cash generation and reaffirm our target range of 40 to 50% of EBITDA. Having leveraged our equity position for the acquisition in distribution and logistics and while pursuing our M&A strategy, we continue to manage our equity ratio actively. At the half-year, we report an equity ratio of 58.9%, just below prior year's 60.3%. We are working towards the further deleveraging of the balance sheet while making use of our strong financial position to support innovation and growth. Given the both mentioned developments, we see a return on invested capital and return on capital employed on comparable levels prior to prior years along the profitability. Let me go into the development of the individual segments, starting with engineered components. Third-party sales of the first half year amount to 577.8 million, reflecting strong organic growth driven by the extraordinary electronics end market, as mentioned earlier. Growth in electronics, together with the successful start of operation in Kanagala, India, led to a nominal increase in FTEs versus prior year, despite the ongoing adaptation of the organization. Despite the overall industrial environment, we achieved solid progress in automotive. This was mainly driven by the initiatives to streamline production and distribution network. The medical business remained stable while the industrial business has benefited from demands in the aerospace and market in Europe. with the acquisition of Heartland Precision Fasteners, which we announced on July 10. We underlined our strategic ambition to expand into aerospace market in North America. The transaction asset is expected to be closed in Q3. Fastening systems. Third-party sales showed some unexpected momentum in Europe during the second quarter and improved, but overall ended at sales of minus 1.1% reported below the prior year. Price mix effects were strong, particularly the US market, while demand in North America remained flat. Acquisitions made a positive contribution of 2.4%, consisting of Zahn, Germany, and DB Fasteners in the US, which was an acquisition in the latter of last year. Overall, we show an organic growth of 1.2% for the segment. Distribution and logistics shows third party sales of 687.7 million, and this is up versus prior year driven by the acquisitions of the former partners Goethe Old Droger and Persman but also additive manufacturing. We saw slight improvement in momentum in the first half year supported by solid pricing development although the FX environment remained adverse. The streamlining of the organization shows effect in profitability, whilst favorable pricing situation supported the margin during first half year. The closing of the acquisitions of the three partners was completed as scheduled during Q1 and Q2, and integration is progressing as planned. The same applies for the acquired 3D business jelly pipe. These acquisitions strengthen the market position, not only in Germany, but also in Poland and Benelux and give us a good footprint in Europe as described. With that, we move on to the 2026 guidance. We confirm and reiterate our guidance for the current year of 3% to 6% of growth. measured in local currencies and including scope effects. We also confirm that the adjusted EBIT margin will remain in the range of 12 to 15%. With that, ladies and gentlemen, I conclude the performance report. Thank you very much for your attention. And we will now go into the Q&A. Yes. Give back to Sorry for that interruption. With that, I hand over for the Q&A, which is moderated by Benjamin Sieber.

So we start with the Q&A with Björn Iffert from UBS. Björn, you can unmute yourself and start.