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.

Sorry, we seem to have some technical glitches here. So we ask you please write your question to investor dot relations at SFS dot com. Sorry for that. Once again, please write your questions to investor dot relations at SFS dot com and then we'll get your questions. We'll read them out loud here and answer them. So please start writing emails. Yes.

I'm up and it's that's good.

So we seem to have some technical glitches here. In order to overcome them, we ask you please write your questions to investor.relations at sfs.com. Once again, investor.relations at sfs.com. And then we'll read out your questions and answer them.

Good, we start with the question from now Tobias Varnholz from Odo. On the top line, what has roughly been the price impact in the first half year and what's likely for the second half year? Maybe you could also comment if there has been some one-off pre-buying effect somewhere?

Good morning, yes, Fabian, thank you for the question. First off, let's discuss segment by segment. It's a very good question. In the segment engineered components we had in the year 2026, virtually no price increases which hit the market. We have done major adjustments in the year 2024 and 2025 and are now more or less through those major adjustments over the whole segment, certainly. within certain regions like India, where we have seen heavy impacts due to the crisis in the Middle East. There we have seen 7 to 8% price increases on sales of around 50 to 60 million US dollar. Also in China, we have seen selective price adjustments. here and there with some customers. I would also quantify them to maybe around 3% to 4% overall total business volume of around US$200 million. Then in the segment fastening systems, we have seen price adjustments. We have seen the growth of 1.2% in the segment. Roughly 2 thirds is volume-based and 1 third is price-based. and in the segment distribution and logistics, we also have seen some selective price increases, probably amounting to around 1% in the segment distribution and logistics overall. For the second half of the year, we would expect also some further adjustments similar to what I just have stated and mentioned mainly in the fastening systems but here focused on Europe and in distribution logistics we'll publish a new catalog and also there we'll see some selective price increases in D&L engineered components at this point in time we do not expect or foresee further price increases. Then you ask about one-offs also on the sales side. We have seen certainly some tactical purchasing ahead, but not amounting to a substantial volume which needs to be mentioned in engineered components, fastening systems and distribution logistics. It's small or minor that we sometimes see a little bit an increase in a specific month in demand and then lowering off in the second following month. Overall, we just see a little bit more bumpy, uneven development in general, but not something that's concerning. or also not something that's in relation to us selling off specific sites or maybe closing down specific sites. There has been no one time large effects which are worthwhile to mention at this point. Thank you for your questions.

And we have a follow up question from Tobias Warnholz on the margins. First question on EC. With less seasonality showing up, is it fair to assume a flat margin level in second half versus the first half? And also on the margin side, on the D&L side, looking at the current high margin levels, are these sustainable? And would you need to upgrade your general 8 to 11 EBIT margin target bracket for D&L?

Thank you very much Tobias for the follow up. Starting with EC, we certainly see a different mix. Our customers have been very successful with the launch of their new products. And as I said, the the mobile phone business carried into Q2. We expect that the schedules for the next season in Q4 are reviewed and will not be as distinct as in prior years. That will also have a bit of an effect on the margin side and therefore we expect a more flat development from that side than in the past. but there is also a considerable question on the mix effect and what our customer is then willing to launch in Q4 and how much is our participation. So there we would now portray a more flattish or a not as distinct pickup in Q in second half year for EC from the electronics business. The second part of your question relating distribution and logistics, it's visible in the margin of D&L. We had very favorable pricing situations where we saw some price increases that Jens described. and we also had a counter effect that we enjoyed still rather low purchase price on the supply chain, which we benefited from. That's going to ease out slightly for the second half year. We'll work with price increases as set and therefore expect to counter counterbalance some of that effect, but we do not see ourselves yet in a position to to upper the bandwidth for distribution and logistics in the mid-term. Hope that helps to answer your questions. Thank you very much Tobias.

Good. Then we continue with questions from Fabian Piasta from Jefferies. First question related to CapEx. CapEx for full year 26. First half year was roughly 32 million or 2% of sales. Will you expect an acceleration in the second half year?

Thank you very much. Yes, as I said, we look at midterm 4% to 6%. We will see investments in the second half year picking up as we are investing into growth opportunities and modernizing our production network. Expect us to be on the lower of the bandwidth in the short term, but mid-term we certainly strive to keep up our professional productivity programs and our physical property plant and equipment and therefore we will strive for these four to six percent in the mid-term.

I think what we can add here also is that we had kind of a pre-spend on our Asian activities especially in India and China over the last few years. We see now that the markets are shifting, the opportunities are mainly in India and China as you also see with the growth development in our half-year report and as Volker also mentioned numerous times in Europe. We have been a little bit tighter with capacity management overall and utilizing it better. We don't need to support major growth initiatives at this point in time because our customers also readjust their value-added footprint and therefore we see this development currently. But certainly going forward, we have projects to expand activities in China, for instance. We have activities also in Malaysia to expand in India. We are just filling currently up the Kanagala site, which we have expanded and also would foresee there a further expansion near term in probably the next one to three years. And then also we're having discussions about maybe a market entry into Vietnam with some also value added locally on a very low level, but also a step forward. So we see the activity shifting, but also as mentioned, we have done pre-investment and we are therefore in good shape and ready to take on more orders and more growth mainly in the Asian region.

And next question from Fabian Piasta, did the US business include tariff pass-ons and could you quantify them?

Yeah, tariffs will be a very good question. Tariffs, we said that the volume of 30 to 50 million could be impacted by tariffs. Certainly, there was a much lower extent visible in first half year. and we managed to profit from our local to local, so the local value add, the local sourcing, the domestic supply chains, they sheltered us from this effect to a very large extent. On the other hand, we also had the decision that some of these tariffs were raised in an undue manner and courts defined that process to get back parts of the tariffs paid, just to give you a bit of a sizing that The part that we are trying to regain and partially already got back is at a very low one digit million number. So overall, yes, but more of an administrative burden than as a financial issue to our overall P&L in the US.

and on the top line we can say the effects we have seen in the previous year in 2025 when we had deliberation day afterwards pricing adjustments have been implemented quickly into the different relationships with our customers and therefore this year we have not seen an impact on the top line due to those tariffs.

And then we have two final questions from Fabian around electronics business. Can you share some more details on the mobile phone cycle and what is the expected implication on the momentum in engineer components in the second half? And the second question is what is the share of HDD sales on total EC? and HED specifically for data centers application.

Very good question on what's the strategy on handheld devices, mobile devices overall by customers and in general by our large customer. Overall, we have seen that there's a focus on high-end phones. and there's also, I would say, a reconsideration of how many models will come to the market and when do they come to the market. That's kind of a tactical decision and maybe as a potential model to consider is that high value models come to the market but they come exclusively to the market and further models will follow later on and with that the focus is much more on those high end high value models on the consumer side to purchase them to buy them and later on that's followed up then maybe with lower value models in the quarters to come. From our point of view, I would say yes, we see changes in strategies our customers are using to position the products attractively in the end market with consumers. We have seen launching cycles in fall, we have seen launching cycles in spring, variations between the different product groups when this is happening. And so we also see currently there are some adjustments and some movement. Overall, the innovation discussions, the development cycles are intensive overall. We first of all see on our side the stamping technology where we gain step by step more access and volume overall, still on a small scale, but also progressing nicely. and then certainly our very strong position as a fastening supplier for screws and other fastening solutions where we certainly have the leading position with our customer. And from that point of view, we look forward to exciting 2026 in terms of the model strategy. But once again, as Volker has mentioned, also probably a more even development throughout the year, which is not a disadvantage to us overall, The cyclicality, which we have seen in the past, which was very much focused toward the second half of the year, had also some tension and stress attached to it. So from that point of view, we look forward and optimistic on what comes around the corner. that from maybe to question one.

Yeah, and hard disk drive business you ask for. Hard disk drive business is predominantly driven by the nearline applications. So that is data centers as said. We see significant investments and projects in data centers and we are in very close contact with the main hard disk drive providers in that field. which is a specialized topic. We see further development in HDD into higher alloys, into other materials in HDD as temperature in a hard disk drive is pushed towards other levels as the prerequisites of cooling are changing. So that all puts demand on hard disk drive components and we are in that field and enjoy good demand from that. We also foresee that it's going to be a stable demand. We push that business to be 80 to 100 million business turnover per year and are on good track on that. it's going to kind of keep there. It's not going to double or whatever. Some of these projections we deem as overrated. We have the capacity in place. We can go with the demand. We can go with the demand not only from a volume side, but also from a technological side, meaning, as I said, other materials, higher alloys. and are with our customers in a clear way to model the demand so that they have stable and reliable supply from our side. So your question was, what is the content within EEC? How much is hard to describe? So over the full year, we drive it to 80 to 100 million business. That's it. Hope that helps your question. Thank you very much.

Good and we continue with Jörn Iffert from UBS. First question, do you see the beginning of an industrial production recovery in Europe now or what is your assessment?

That's a question we should ask you as analysts, you know, because you have much broader exposure to different and probably different companies overall. But certainly, yes, it's the question, you know, it's the big elephant in the room. Is this now a recovery or is it not a recovery overall? We can clearly say that the customers which have adjusted to new opportunities, like for instance, defence and aerospace, they do well, they grow. and the ones which are still holding on and maybe not going with the new opportunities or maybe don't have the capabilities. Those are still fairly challenged as we name it, you know, machine building activities. We see on the automotive side also here and there, you know, challenges, especially with commodity applications and not high end, high need applications overall. So those customers in distribution logistics are still challenged and are still suffering. So from that point of view, we do not believe that overall we will see a start of a new cycle immediately. Probably will take a few more months. It will probably take another six to 12 months to firmly see the numbers getting better step by step and also returning back to organic growth patterns which are then closer to the GDP of development overall in Europe or in a specific country. So still see industrial customers suffering to a large degree, but also customer groups doing quite well. We believe we have seen the bottom. We believe we have seen a slight improvement and on the way to recovery, it's probably where we are, but not recovered yet. I would formulate it that way. Thanks patients and we hope certainly by year end that we have more insight and maybe a better outlook into the year 2027. But at this point in time, Our strategy is we are cautious. We focus on innovation. We make sure we have best performing delivery service overall, but we are not getting overly excited about opportunities in the European industrial sector.

And then a second question from Jörn Ifert, particularly the smartphone business. Do you see new AI related smartphones and applications being planned by your customers? And do you have visibility on rising wallet shares in this strong replacement cycle?

On the AI side, it's built into everything which is around us already today. I mean, step by step, we see in many devices and solutions, AI is part of it. We have not seen yet specific applications which are centering just on AI. So hardware which is based on specific AI applications and opportunities, that seems not to be the case. We have seen customers renaming their devices towards AI in some form and some wording overall. And we certainly see that a smartphone becoming even more powerful, more important for the consumer to those AI capabilities. Here and there, there are some, I would say, prototypes and some ideas around on AI specific applications, but we have not seen that materializing at this point in time. We have not seen something yet being close to being introduced to the market, which could create a huge lever or change, you know, the marketplace that it is currently, as we see it currently, that's not the case. But as you know, there are many smaller startup companies which are testing and working on whether it's hardware or whether it's classes or whether it's other devices and designs but so far we have not seen something that's overly attractive and would be a turning point or worthwhile mentioning at this point in here in terms of opportunities for the SFS Group in electronics business activities.

But maybe we can say that on the hardware side, we see some opportunities to increase share of wallet. again with the next model round where we see that they want to work on the design, which is not going into AI or any other, or at least to what we can see. But we are confident that we can pursue our way of increasing share of wallet in that area, right? That is clear, yeah.

And we continue with two questions from Christian Bader from ZKB. Question number one. How much of the costs related to the program to adjust the distribution and manufacturing footprint remain outstanding in the second half of 2026?

We see roughly half of it outstanding for the remainder of the program towards end of 2027, as said. and a large part is linked to the discontinuation of entities that we are in the way of unwinding or giving up. or selling and the so-called CTA, the currency translation effect that we have sitting in equity will be booked at the time when we give up the entity. So we are working that we can do that as quick as possible, but we cannot We cannot judge today whether this is going to happen in 26 or will fall into 27 due to it being linked to regulatory approvals and legal pursuits. But what we can say is that we will stay within the 75 millions. We see that that cost estimate will hold. and I said half of it is already in our results and normalized in our results. And you see that ongoing, right? The effect that we had in first half year is a timing effect. That's why it is a positive effect on reported results, but it's a timing effect. So we stick with the 75 minutes.

Exactly. And the second question, Volker, maybe you could elaborate a bit more on this timing effect. What exactly was it?

Timing effect boils down to what we announced in Czech Republic. We sold off the entity in Czech Republic. and that was a fortunate transaction as we could grant the people that are working there a future in another environment. Initially, we took the stand that we need to restructure the entity and therefore we did the necessary provisions in our balance sheet which as it came clear that we will sign the contract had to be dissolved. That's the positive effect you see in first half year. Of course, when we sold the entity, we granted the buyer some conditions and also see that some of these conditions will come to effect. And we could not provide for that as we signed the deal with the buyer in the second half year. So we had no title to accrue for that. And that's why you see that distorted position there. But in the end, it comes down to the efforts of the teams that have that have found ways in better selling off entities and bringing them into a new environment versus having to restructure them and making people redundant and we gave that a priority.

Then we continue with questions from Vitushan Vishayakumar from Badr Helbea. Question number one is, could you please elaborate on the impressive growth of 24% in the electronic and electrical end market? What was behind it? Is it only related to HDD business and smartphones? Or are there some other applications that drive that growth? And what can we expect for the second half of 2026?

I think, yes, as you rightfully pointed out, it's impressive growth as we have seen it. And the answers go into two directions, as Volk already stated. The one point is the seasonality that we had a much stronger first half of 2026 to usually compare to 25 in the previous years. So we have seen customer buying cycles continue to expand it. They usually slow down sometimes already in December or January. We have not seen a slowdown now until later on in the second quarter and the new models will start in the third quarter. So we'll see a more balanced development throughout the year in terms of sales development. And secondly, also new applications, We have seen the growth on the stamping side, stamping technology brought into the application. That's something over the last two years you have seen. But we have also new applications, customers more in the semiconductor packaging side, which also helping us to achieve the growth in the region, in the region Asia. And thirdly, as also mentioned in HDD, we also are back on the growth track. maybe not as progressive as we have seen it due to the other two effects we have mentioned before, but also step by step we also see their good organic growth. Those are the explanations or the main drivers for this development.

Then an immediate follow up question, Volker, to what you mentioned before, HED sales in the area of 80 to 100 million Swiss francs in a full year basis. Are they going to be stable throughout the years to come? Or do you expect changes? And can you help understand the trends behind this development a bit more?

Okay, thank you very much for the question. Well, what we see for the future is that footprints of the buildings that are planned in data centers, they are geared towards hard disk drive technology. If you would choose another technology, the footprint of the building would look differently. So that's what we take as a reading for a further HDD demand being stable. Now, the question is, how long does it hold? We all know that there are other technologies in the market. Obviously, the large producer of solid-state data have issues in cost-effectively producing them in large volumes. There are two factories on the building in South Korea. They are trying to do that, but a conceptual issue remains, and that is backup. I think we've discussed that before, that you have to apply different backup technologies concepts when you use solid state versus hard disk drives and that gives for the time being hard disk drive a cost effective advantage and therefore the buildings are still the hard disk drive data centers that are planned. Now what's underlying in the dynamics is the question of How much capacity do you pack in one single hard disk drive? And that comes from how many disks do you put on a spindle? How fast do you turn these spindles? And what technology do you use for making data stored on that respective disk? The move was from magnet-assisted drives to heat-assisted drives. and Heat Assisted Drives, as I said before, they are calling for different materials, different alloys, different technologies and higher precision in the components we deliver. And we deliver the spacers, so we benefit in many ways. We benefit from more spacers as you stack more more discs on a spindle, higher precision parts which ask for different manufacturing and we are in that field and we are able and capable to produce these precise components. Number three, you've got the drive into different alloys and different alloys means higher value add from our side so that all plays into our field. that's why it drives and that's why it also will not go beyond. That is mainly the dynamics in hard disk drive business. I hope that helped.

And when we take a further look out in the supply chain, as Volker already mentioned, SSD, HDD, we seem to be on the right application with HDD. I believe we have also seen that The customer of our customer has a tendency sometimes to maybe be overly positive and maybe having a strong purchasing cycle as we have seen right after COVID. I think the industry is also now more sensitized towards that and probably also more critical. So especially our customers keep that in mind and we do not believe that we currently see a bubble in HDD that capacity is being overutilized and maybe products being oversold. So from that point of view, we believe the supply chain will be responsible. And as Volker mentioned, on the grounds of needs in the application, we seem to have a good run going forward. I think HCD is also characterized with long cycles in the technology side. It took many years to make the change over to the new way of kind of writing the data on the disk. There's discussions on new technologies, you know, maybe being deployed more intensively in three or five years from now. Different materials of space, as Falk alluded to, and also those materials which are in discussion as supporting our growth case and our position within the industry overall. So I believe it's worthwhile to have this discussion. that has many elements. And from our point of view, we are on track and believe also that there are good opportunities for the years to come.

And then we finish with the last question. Following 13.3% adjusted EBIT margin in the first half year, you maintained a full year guidance range of 12 to 15% for EBIT margin. What margin profile is embedded for the second half year and should we expect more from the second half year as of the first half year or can it change? And finally, what are the factors that could prevent SFS Group from finishing towards the upper end of the 12 to 15%? I think

we explained why we see the second half year kind of a bit muted as a couple of trends kick in with electronics. So that also goes into product mix, profitability mix. I think there we gave you the detail. We stick with the midterm guidance of 12 to 15%. and in the short term we will work towards that. Personally I see a lot of potential ahead of us and that's why we're reconfirming that guidance and and gave you hopefully enough details for the second half, so you can kind of try to model your expectations for the full year 2026.

Good, and then we continue with a question from Manuel Lang from Fontobel. on the networking capital side, do you see normalization of the FX in the future? And if so, when will that approximately be? Are we talking about already in the second half year or rather in the first half year, 2027?

We expect that to start normalizing in the second half year, as I said. We are not expecting significant shifts now from an FX point of view for the remainder of the year. Our priority is that we deliver reliability towards our end customers. We have a good collection side on the receivables, so quality of our receivables remains high and our supplier contracts are honored. I think these are the cornerstones of our network and capital management and we are confident that we are seeing an improvement towards the latter of the year starting to bring that down to the levels you've seen with us before.

Good. Then there are no further questions at this point in time. So what we would like to do is maybe also before we close mentioned the highlights of the upcoming investor relation events. So we have an investor day, which will take place on Thursday, September 17th here in Holbrook, Switzerland. We have the annual report being published February 26, 27 in the year 27. then the annual general meeting will take place in April 20th, also in 2027. The half year report 27 will be published in July 21st. And then also please note that there will be no longer a media release on sales figures in January. With that we say, thank you. for being with us here today for your attendance. Please apologize the technical challenges which we had and we wish you relaxing summer days. All the best to you. Bye bye.

Thank you very much. Bye bye.