Hexagon AB (publ)

Good day and thank you for standing by. Welcome to the Hexagon Q2 Report 2026 webcast and conference call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Anders Svensson, President and CEO of Hexagon. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining us here at the second quarter result review. I'm, as said, Anders Svensson, President and CEO of Hexagon, and I'm also pleased to have Enrique Patriksson, our new CFO, with me here today on the call. Some of you might have met Enrique already at the Capital Markets Day or on our road shows, but this is his first quarterly conference call with us. So welcome, Enrique. Thank you. So I will move to the next slide to show the standard cautionary statements. And then after that, we move to the next slide to go through the agenda. So I will begin with Hexagon's performance in the second quarter. Enrique will then present the business review and financials in more detail. And I will at the end conclude the presentation and then open up for Q&A. So next slide. Let me then begin with an overview of our performance in the second quarter. And I will move into the highlight slide of the quarter. The second quarter was an excellent quarter for Hexagon. The momentum we saw at the start of the year continued and even increased in the second quarter. And we achieved our highest organic growth recorded in the last five years. And with a strong order intake, we still built backlog within all three of our business areas in the quarter. We delivered 12% organic growth with the growth across all three business areas. Our gross margin held stable around the 62% mark. despite a currency headwind and very strong hardware sales, so the mix was not positive. And we demonstrated strong operational leverage by improving EBIT AC to 24% in the quarter. Cash conversion was also fantastic at 149%. Alongside this stellar financial performance, we also were very active operationally. The separation of Octave completed our portfolio restructuring or refocusing on precision measurement and positioning technologies. We also launched our new hexagon with updated strategies and new mid-term targets at the capital markets day in April. As a reminder, these targets are for the group and organic growth of 46% between 2026 and 2030. EBIT AC margins of 24 to 26 percent and a cash conversion of 90 to 100 percent of EBIT AC. We also committed to reduce our scope one and two emissions by 70 percent to 2030 from the 2022 baseline and also reaching net zero by 2050. We also began building our portfolio for long-term profitable growth and with the acquisition of Waygate Technologies that we announced, we are expanding our offering into non-destructive testing. We completed the Bolton acquisitions of inertial sense and interest during the quarter. Our cost-restruction program is now almost complete and we are here quite a lot ahead of the initial schedule, so that's very positive. And last but not least, we are proud to be ranked by time as one of the world's most sustainable companies. So in summary, both financially strong and operationally active quarter. And let me take you through it now in a bit more details on the coming slides. So the first one here is the completion of the Octave separation. And I think this is an important milestone of the quarter, of course. Octave was separated from Hexagon effective the 22nd of May. and Octave began trading on Nasdaq Stockholm on the 25th May and was then listed on Nasdaq New York on the 28th. With Octave now separate as a listed company, Hexagon is a more simple and more focused business going forward. I want to wish Mattias and the Octave team every success as they begin their journey as an independent company. And with that, I will move into our organic growth on the next slide. And the organic growth in the quarter was very strong at 12% with growth in all of our business areas. Autonomous solutions led the way, growing a fantastic 20% in the quarter. Manufacturing intelligence also very strong at 13% growth. And in infrastructure and geospatial, we grew 4% in challenged market conditions. By end market, we saw strong growth in aerospace and defense. and in electronics both in consumer electronics and semiconductors but also in general manufacturing and this more than offset the weaker market conditions we could see in automotive especially in China in agriculture in the Americas and also construction within both China and Europe and this is a reminder of the benefit of having the diversification we do both in terms of geography but also industrial verticals You will also see some movement in our software and service revenue and also in the recurring revenues, and that relates primarily to the sale of the design and engineering business, but also to a strong hardware sales quarter. A strong hardware sales quarter, of course, takes down the recurring revenue numbers for the quarter, but it enables future sales of software and service solutions, of course. Positive was that the adoption of our new products like Maestro and TS20 is progressing very well. And that is an important support for our future growth, but also our future gross margin development. On the next slide, I will now move into how the organic growth was spread across our regions and industries. So in Americas led the growth with 19% growth with construction, general manufacturing, aerospace and defense, and mining all growing strongly. The only weak spot in America is basically agriculture, and it has been cyclically weak for quite some time now. In EMEA, the growth was 7%, but the markets were more mixed here, with outperformance driven by general manufacturing and aerospace and defense. Construction, which is a key market for us in EMEA, and especially for infrastructure and your spatial remain challenged. Markets in China were very healthy, with the exception of automotive, which remains tough, just as in the first quarter. Construction grew for the first time in some quarters for us, but this is from a low base following the stocking program that we had in the last 12 months. And the market outlook for construction in China remains subdued. The rest of Asia grew modestly with 10% growth in India being offset by some weakness in Southeast Asia and Australia Pacific. If we now move into the next slide, we will look at the gross margin developments. And we maintained a strong level of gross margin at 62%. And if you then exclude design and engineering business that we have sold, the gross margin was flat year-on-year at 62.3%. But the underlying movement was even stronger than this, because we had a 50 basis points negative currency impact. And as I mentioned, we saw strong hardware sales, with stencil sales increasing 17% in the quarter, which on average carries a slightly lower margin than, for example, software sales. So the mix was not contributing positively. However, this is, of course, a good platform for us, as I mentioned, grow our recurring revenue and software share over time as these sensors will then have pull through opportunities of software and service sales. Then I turn into the profitability slide. And before I get into the analysis, a reminder of the EBIT AC, which is our new profitability metric, which we launched at the Capital Markets Day in April. And EBIT AC is a conservative measure of profitability that basically expenses all R&D in the period. So it excludes the gap between amortization and capitalization in R&D expenses. In the second quarter EBIT AC improved materially of 330 basis points to 24.3% compared to 21% in the comparison period. And this excludes the D&E contribution in both periods. Around 100 basis points of that improvement came from currency tailwind. But more importantly, around 230 basis points came from operational drop through from the strong organic growth. And it was also supported by early benefits of the new operating model, the hexagon way, and around 14 million euro in the quarter savings from a cost restructuring program. and unless otherwise stated as we defined in the capital markets day we exclude robotics from this metric and the reason for that is of course that this market is in a very early stage and robotics needs to be able to focus on scaling and growth rather than a quarterly performance in the quarter the incurred cost for robotics was 10 million euro and it was fully in line with the guidance we gave at capital markets day of approximately 50 million for the full year. And I'll move over to a short update on robotics on the next slide. And the robotics business is making great progress within both partnering with other companies and also attracting great interest from customers for humidor factory trials. In the second quarter, we announced an expansion of the strategic partnership with Schaeffler which will result in deployment across Schefter's factory network in the coming years of at least 1,000 humanoids. We also announced a new pilot with the company Phil, where Aon will be working to achieve advanced manufacturing solutions for machine tending, machine inspection and other inspections, and material handling. And this brings the total number of public partnerships now to four, with additional pilots on the way. We continue to expect to reach commercialization by the end of this year. And we are excited about the potential of this business going forward. And as we previously communicated, we are evaluating partner arrangements, et cetera, if we believe that that would be the best way to realize the opportunity ahead. And before I hand over to Enrique, I will move to the next slide and give an M&A update for the quarter. So also in the second quarter, we remained very active on M&As. The most significant one was the announcement of Waygate Technologies, which will be acquired by our manufacturing intelligence business area, and it takes us into the non-destructive testing markets. And this is a significant acquisition for us, which will expand our serviceable market within MI significantly. And I have discussed this acquisition at various market-facing events already, So I won't go into too much details here today, apart from saying that we still anticipate completion within the second half of 2026, and most likely in the fourth quarter. Alongside this, we also completed two Bolton acquisitions. And the first one is the inertial sense, which was acquired by Autonomous Solutions. And the strength of our assured positioning, navigation and timing portfolio with tactical-grade GNSS and inertial systems technology, and hence expands our resilient positioning capabilities in GPS-challenged environments. And this has been a big growth area for us recently, and was so also in the second quarter. The second acquisition that we closed was ITREF. It was acquired by Infrastructure and Geospatial. It adds to our mapping capabilities with high performance airborne hyperspectral and thermal imaging sensors that operate across a wide spectrum of wavelengths. It is enabling precise material identification and also temperature analysis that the existing visible and near infrared modalities cannot deliver. We are excited about all these acquisitions and we want to welcome these teams into the HEXAGON team. And with that overview, Let me hand you over to Enrique, who will take you through the business review and the financials in more details.

Thank you, Anders. It's a pleasure to be here today on my first Hexagon results call, and even more so to discuss this very strong set of results. A couple of reflections here to start. I've spent the past few months going around to some of our major sites and meeting the teams responsible for delivering this impressive second quarter performance. And I've been really impressed by the talent, dedication, and expertise throughout Hexagon. And I feel excited about what has been achieved in the quarter, but also what we can do in the future. So now let's look at the results more in detail. This page, titled Revenue and Profitability Year-over-Year Bridge, really captures the performance and the story of the quarter really well. Starting with NetSafe Bridge at the top, We added some 40 million euros to our top line to reach 1.05 billion euros. However, structure and the divestment of the D&E business accounted for a reduction of about 70 million. So in reality, we grew our top line by about 110 million, including a 1% of FX. So that equates to about 12% organic growth in the quarter. More importantly, our EBITAC, our new profitability metric, increase organically by almost double the rate of the growth of our organic top line growth. So that's a recurring theme when you look at our results and look at our various business areas. The operational leverage is great, especially when you get this type of growth. In the quarter, we had a bit of help of FX or rather the negative impact we had last year was not repeated this year. So now let's turn into the business areas. Starting with manufacturing intelligence, which grew at an outstanding 13% and generated a strong improvement in margins. Growth was driven mainly by the stationary and portable metrology divisions, particularly within aerospace and defense, general manufacturing and electronics. Automotive remained structurally weak, particularly in China and EMEA. Growth was across geographies, but remained strongest in the Americas, and China grew by high single-digit rates. Importantly, order intake also grew at the high level and growing our backlog. Profitability, if you excluded the vested design and engineering business, margins improved by about 380 basis points, which is a very good progress. This was driven by the strong organic growth and some currency benefits. Now moving to infrastructure and geospatial, the business area formerly known as geosystems. This was another good performance, with solid growth despite our exposure to EMEA construction markets, which remained challenging. By division, the growth was strongest in construction software and services, in geomatics, in radar monitoring, and in machine control. The Americas grew strongly, and China grew from a low base as restocking came through, while EMEA remained challenging. Our new TS20 total station continued to sell very well, and that supported the growth in Indiomatics. In terms of margins, the improvement reflects the higher volumes, a more favorable product mix, cost control, and some help of currencies here as well. So another business area with great operational leverage. And then last but not least, autonomous solutions, which once again delivered a stellar growth and margin performance. This was driven by a significant increase in our positioning divisions, which benefited from continuous strong demand in aerospace and defense, and more than offset the weaker conditions we see in agriculture and marine. Both the Americas and EMEA delivered strong double-digit growth, with Asia being weaker. In terms of products, growth was led by our anti-jamming solutions, our high-precision GNSS, and our correction services. Backlog continued also to grow here. margins expanded on the back of those strong volumes, though that was partly offset by currency. Now, let me mention a couple of things in our income statement and highlight a few things. EBIT1 moved in line with our EBITAC, but that was somewhat obscured by a reduction in the capitalization amortization gap of about 125 basis points. However, if you exclude the D&E business, from last year, the delta is about 170 basis points. Our adjusted EPS was about 7.8 euro cents a share, lower than the 9.2 reported. And this was due to the gain of the cadence shares that we sold in the quarter, and that was about 71.5 million euros, which resulted in a positive financial net in the quarter. So you have to remove about 71.5 million euros to land into our normalize net financial items in the quarter. Now on the restructuring program, we continue to make excellent progress. We targeted a savings of 74 million euros as we announced at the capital market day, and we have now reached a run rate of 73 and a half. So we are essentially at the full run rate. In the second quarter alone, the program delivered 14 million euros of cost savings. We now expect the program to complete by the end of the third quarter, which is ahead of our original schedule. Importantly, we are retaining these savings as demonstrated by the profitability improvement. This is thanks to the early benefits of our new operating model, the Hexagon Way, which is improving the operational discipline. And that discipline is demonstrated in the results with great leadership in divisions showing hunger to deliver on enhanced shareholder value. Finally, from me on cash flow and net debt, cash generation in the quarter was very strong, as Anders mentioned, with cash conversion at around 149%. That's the operating cash flow pre-tax of 364 million compared to our EBITDC, including robotic costs of about 245. As you can see from the waterfall, the driver here, it was a strong contribution from working capital. particularly driven by strong efforts in both accounts payable as well as in collections. In addition to the strong cash flow, the net debt bridge below here has a few highlights I want to draw your attention to. The Q2 impact from the cadence share sales can be seen in the financial assets and you can see the octave transactions coming through on the line referred to as other. Those two together contributed with a bit more than 800 million, and then we had dividends of about 381 million in the quarter. The increase in cash generation and the additional proceeds from the cadence shares helped to drive a material improvement in our net debt, which took our leverage down to 0.3x during the quarter, way below our target level of 2.5 times. Even if we add the already announced Waygate acquisition, we retain a substantial firepower going forward. So in summary, for the quarter, one, fantastic growth, that secondly, had true operational leverage on our EBITAC, and that thirdly, converted into cash. And with that, I will hand over to Anders for some concluding remarks.

Thank you, Enrico. Yes, must be a very good quarter to start reporting with Hexagon. Let me now bring this together with a short summary for the quarter before we open up for any questions. So operate if we move to the Q2 summary slide. So first we delivered excellent organic growth of 12% while still building backlog in all of our business areas. We saw a particularly strong demand in aerospace and defense, electronics and general manufacturing. Secondly, we continue to reshape our portfolio completing the octave separation and announcing the acquisition of Waygate Technologies. Third, we improved our operating leverage, translating the fantastic growth into stronger margins, helped also by benefit of the restructuring program and the early benefits of the Hexagon Way operating model. The restructuring program is ahead of the schedule, as mentioned, and we will achieve full run rates at the end of the third quarter. We entered the third quarter with strong momentum and a high order intake from the second quarter in all our business areas. And also with strong end market trends that we expect to continue also in the third quarter. And with that, we would be happy to open up for questions.

Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. to withdraw your question. Please press star 1 and 1 again. We will now take the first question. One moment, please. And your first question today comes from the line of Daniel Yorberry from Handelsbanken. Please go ahead.

Thank you very much, operator. And good morning, Anders, Enrique, and Tom. And congrats to really strong numbers here and strong market trends. A few questions from my side. You write in the report about some quarterly help from a U.S. tariff refund. Can you give any more quantification on this, on the margin on EBITAC or something that gives a ballpark underlying? Thanks.

Yeah, so if you look at just tariffs comparing year on year, we have got some refund in tariffs both in Switzerland and in the U.S., and that amounted to a net positive of 2.4 million euros if you compare to the previous year. However, that is completely netted with additional costs from Iran in the Middle East due to increased freight costs, etc. So if you take Iran plus tariffs, it's actually at the net zero. I see.

Perfect. Thank you for the clarification. And if possible, you had talking about good order intake as well. Is it possible to give more comments on the bill levels in the divisions ballpark? Thanks.

We actually don't go out with that number normally. And it's because a lot of our businesses don't really build a backlog. If you go to infrastructure in your spatial, for example, a lot is invoicing and sales at the same time, or order intake and sales at the same time. So we don't really go out with that number, but we can say that there was good order intake in all businesses since we built the backlog in all areas. But of course, if you look monetary on the order intake, it contributed most from MI because that's the largest and that operates mostly with backlog as well. Yeah, perfect.

Thanks, Jan. And finally, from my side, you talk about expanding scope in Scheffler. minimum 1,000 humanoids, but I believe that was a similar number that we had before as well, or can you comment a little bit more on this expansion, what it means?

No, that is something we have already communicated during the quarter, but it happened during the second quarter, so it's a part of our summer. Yes.

Can I go back to the queue? Thank you. Thank you, and have a great summer, the rest of it. You too.

Thank you. We will now go to the next question. And the question comes from the line of Anna Sandlin from Bank of America. Please go ahead.

Hi, good morning, everyone. Thank you so much for taking my question. Two for me, please. So first, would you be able to talk a bit about the moving parts in your EBAC margin trajectory in H2, given your restructuring program is now almost completed, you're getting better operating leverage, and maybe also some shifting between the software and hardware mix. How should we think about this trajectory going into the second half of the year, especially with week eight also potentially starting to contribute towards the end of the year?

Yeah, so if you look at EBIT-ASC, so we have reported an improvement of 160 bps, and if you take them out D&E from both periods and you include robotics, So the gain is 330 basis points. Roughly 100 BIPs is then from currency, positive currency contribution. If you look at the restructuring program, we say that it contributed with 14 million in the quarter, and that's roughly then 130 BIPs. So if you look at the remaining 100 BIPs, then that's sort of the operational leverage and other improvements in the group.

Okay, that's very clear. Thank you very much. My second question is on the robotics partnerships. You know, I guess two part of the question. So first that should we expect to see a significant increase in cost given the commercialization plans by the end of the year? What are the sort of investment you need for the mass commercialization of the robotics business? The second one is you talked about the partnership plans in the slides. Would you be able to elaborate a bit more on that? What kind of partnership you're looking for? What would be the ideal kind of scenario, you know, for your robotics business going forward?

Yeah, so there are basically two close partnerships announced. One is the Scheffler deployment of 1,000 units in the next, I think, five years up to 2032 across the Scheffler manufacturing network. Then, of course, we have the BMW Leipzig production deployment that we discussed also previously. And that was with a first milestone in mid-June, a press event on this. So that was, those are the two big ones. But, of course, we have more pilots ongoing. We have four communicated external pilots, and we also have non-communicated pilots with a, also with a a pipeline of more potential pilots going forward. But we want to move this now into commercialization, and hence we have expanded the partnership with Schaefter, for example, that from the end of this year, we can then deploy like a robot as a service or deploy directly and not only go through pilot sales going forward. Then what was your first question?

Yeah, just like would we see any significant increase in terms of cost? What are the investments you need for that?

Yeah, so this is what we have communicated previously as well, that we are looking for potential business partners where we can take a smaller ownership than 100%. We have not come to any conclusion on that. We will come back to you guys when we take that decision. So if we find it most beneficial for the business itself to be successful, then we are open to partnering with others as well. But we have of course not achieved the highest cost level now with 50 million in this year as this business goes into sales that will of course push costs up further before you start reaping all the benefits of the productization and commercialization and the pickup in the market of humanoids in general and we also talked about this in the capital markets day that pickup is expected somewhere in 32 roughly so Of course, we have not achieved the highest cost level here yet.

That's super clear. Thank you very much.

Thank you.

Thank you. Your next question today comes from the line of Simon Granath from ABG Sundell Collier. Please go ahead.

Thank you, operator. Hi, and thanks for the presentation, Anders and Enrique. I am eager to dive further into the 30% organic growth for MI in this quarter. Have you seen anything you would assess as one loss or non-durable tailwinds to growth, like due to changes in the order patterns due to the inflationary pressure we have noted for several input components? and also separately, how do you see the momentum in semis? Is the Q2 growth reflecting early cycle capacity additions or have you seen this momentum for a longer period? Thank you.

Yes, thank you. We have seen now good growth in MI on the last three quarters, right? So we believe that and it's actually increasing every quarter so far in the last three quarters. So we believe that the momentum that's in the market is strong. We were elaborating that it could be tariff-connected, some sort of hold-up of investment for some time, and that might have some effect still, but I wouldn't say that that is significantly contributing, since we see this stable order growth or order intake growth all the time. I would say the underlying markets within both aerospace, and that's both in aero and space, and also in the defense side, electronics basically all over, and strong in general manufacturing in many different segments. So we don't see that this is something that is getting weaker for us currently, and we think that those strong markets will remain. But also, you should take into account that not everything is going well. There are many verticals that are forming to a lesser extent. For example, the marine business, which is impacted by the Middle East crisis. The agriculture business, which is in a very low level. And also, of course, construction, especially focused on Europe and China has weaknesses. To some extent, those are also impacting MI, but the main sort of drag for MI currently is automotive, and especially then China, which is down significantly on a year-on-year comparison. But we don't see that we are moving into a worse climate going forward. We see that it seems to be very stable for us.

Thank you. Very clear and encouraging stuff. And I also have a follow-up on some of the comments you made there, and that is relating to the construction part in EMEA here in Q2. Because given recent product launches like the TS20, which is selling really well, why is it so that you move into negative territory? How would you describe the current landscape, and should we expect the negative trend to continue over the coming quarters?

Thanks. I wouldn't say that we're moving into negative territory. I would say that we have been for quite some time in construction in Europe in negative territory. I would rather say that it's slightly improving in Europe. And especially then we can see some effects of infrastructure projects in Germany that is then starting to contribute positively. But we see a strong growth in construction when it comes to North America, which is also important for us within these new products launched. So if you look at the Middle East, there is some impact of delays of investments due to the crisis that we are having currently in Middle East. But I would say, if you look versus the previous quarter, might be some small improvement in construction in Europe.

Oh, I was referring to the blue dots last quarter, but then I understand it's predominantly a timing effect, so slight improvement quarter over quarter.

Yeah, slight improvement quarter over quarter.

Thank you so much. Have a great summer.

You too. Thanks.

Thank you. Your next question comes from the line of Mikael Lassin from D&B Carnegie, please go ahead.

Yes, good morning. Thank you for taking my question. I have a question related to defense and markets. So you commented that manufacturing intelligence and autonomous solutions benefited from stronger space and defense demand. And I'm wondering if you could give us more color on the specific defense programs or customer applications for the categories driving that growth would be helpful.

Yeah. Thanks. So what we do, we sell actually positioning solutions for challenged environments. And some of our customers are then using those technologies that we sell with defense applications. But they are also used in a range of non-defense applications. So it's not that we sell a specific product into defense from that perspective. So what we are measuring then is more how much we sell those different technologies into different end customer use areas. And they can be marine, they can be defense, they can be agriculture, they can be aerospace, they can be space applications. And they're basically the same product. So it's not a specific product. It's more positioning solutions for challenged environments that we sell.

Yeah, exactly. Got that. But I'm just thinking if you're benefiting from re-empowerment in Europe, restocking, things like that.

Of course. We are benefiting from the buildup in Europe. We are benefiting from US replenishing their inventories with the Iran situation. We are, of course, also benefiting in this area from the Ukraine situation. So those things are benefiting us. And I would say the whole buildup of European defense is benefiting us. So we are writing that.

Okay. Thanks. What type of growth are you seeing in aerospace and defense in, for example, in those two segments?

So if we look at aerospace and defense, because we normally talk about those together. So are we taking that number?

No, we're not.

We're not going out with that number. But it's a strong growth in aerospace and defense. Defense is now just over 5% of the total group sales.

Okay, got it. Can I just ask a question about Waygate? I'm thinking about here how we should model that when you expect it to be closed and consolidated and how you can take the margins in Waygate towards the MI segment and what time frame you expect that to materialize.

So as I mentioned, we expect to close the acquisition. in the second half, probably in the fourth quarter. And then we will, of course, consolidate the numbers as quickly as we can. There is some challenge here. We have a US GAAP reporting for some entities, and it will require quite a lot of work for our teams. But we will be able to do that, and it's, as previously communicated, 630 million US dollars for the whole company at roughly 10% EBIT margin. And if you take out the two focus groups or focus businesses within Waygate, which is then the remote visual inspection and radiography divisions, those contribute with about 330 million US dollars and a margin at 16%. And then we are evaluating also what to do with the two other divisions, which is ultrasonic testing and imaging solutions. We have categorized them as stability, where we can either help them to do a turnaround, improve the business, and create value that way, or if we don't think that we are the right owner, we will find an owner, which is the right owner for those type of businesses long term. Then, of course, it will take time before we achieve the average MI margin for these acquisitions. But we already have plans in place. Of course, those plans need to be refined when we get further insights when we become the owner of the businesses. But we have quite good plans to achieve significant improvements in all four of the divisions.

Okay, thank you very much. Thank you.

Thank you. Your next question comes from the line of Andre Cookden from UBS. Please go ahead.

Hi, good morning. Thank you very much for taking my questions. Can we just go back to the second half profit margin bridge? Could you talk about whether we should expect any further self-help in the second half? And on the FX that helped in H1, I presume that's sustainable from the change in Swiss franc versus dollar and the rest of the basket rather than a one-off, but could you confirm that? Maybe start with those two.

Yeah, so if I just start quickly on the FX, I would say now it's more normalized for this quarter. It was rather that it was significantly negative in the comparison period. So I would say it's more normalized now, and we, of course, are not forecasting exchange rates, but we believe that this is a more normalized level. And when it comes to self-help, we have the RIF program, which will then contribute with estimated roughly 18 million euros in the third quarter. And that will then be at full speed. It did 14 million euros in the second quarter. So there is a bit of self-help additional there. And then, of course, we have within the operating model that we have implemented, there are lots of initiatives around the group and the different divisions to drive self-help improvements going forward that we are not talking about externally. It's more a way with how you manage your business. So definitely we expect more self-help going forward, and we also expect a strong leverage on growth.

Great. And just while on the bridge, when we think about the price-cost, you mentioned that the, I think you said, 2.4 million of tariff refund help in Q2 was offset by higher input costs on the back of the Middle East conflict. Are you raising prices to mitigate those kind of high input costs in the second half as I assume the tariff refund was a one-off?

Yes, the tariff refund is actually not the complete one-off. We expect some benefit of that due to administration delays also during here in the second half of the year. So that will be, but those are still one-offs. So you're right from that point of view. But we are always considering pricing and freight surcharges, et cetera, when we get these additional costs. And we have become quite quick at implementing these. If you remember, maybe from the first quarter, I said we had some issues with gross margin in one of our businesses, in MI, because we were a little bit late with price increases to compensate. That was completely done. that margin, gross margin for that business rose significantly in the second quarter back to the same level as where we should be. So we are quite efficient on implementing measures to make sure that we compensate for tariffs or other events that can happen around the world.

Great, thank you. And if I may, just last one. Back to the MI 13% organic growth, I think you were very clear to tell us that you don't see anything of kind of a one-off nature in there. But I also wanted to actually explore it the other way because we have seen some of your lateral peers that participate maybe in similar markets also reporting pretty high book-to-bills in the recent quarter, especially with anything with semiconductor manufacturing related. So I just wondered how high do you see the scope of that number actually accelerating of that already fast pace 13%? And what's your assessment on the sort of risk of us running into another sort of 2022 type scenario where we start thinking about chip and other kind of semiconductor shortages driving maybe less rational customer behavior?

Yeah, so we are not giving a forecast on order intake rather we are saying that how we see the market trends and we don't see any of the market trends weakening as I explained earlier and rather we see stability of strong end markets and we also expect that some of the weaker end markets also will turn somehow. And this is the strength we have with such a diverse geography and industrial vertical end market situation. We don't get all the benefits when one market goes up, but we're also very stable when one market goes down. So I think we have a good situation where we can create solid growth going forward. Where we have a bit of a stronger or more difficult comparables will be within autonomous solutions in the second half of the year, not so much in MI, where we had a very strong order intake in the defense area that was delivered almost 50 million euros in the second half, more of a one-off type of order character. So there we have a bit of a stronger comparable in the second half of the year than we had in the first half of the year. but otherwise I see that we can continue our strong performance in our businesses. Currently we don't see any significant risks of running into supply chain constraints, but it's already now quite widely known that industrial ships and memory solutions are already constrained to some extent. We are, of course, monitoring that situation closely and working on continuity plans if something would happen that we can then use other type of solutions.

Thank you very much.

Thank you.

Thank you. We will now take our final question for today. And the final question comes from the line of Magnus Kruber from Nordea. Please go ahead.

Hi, I'm from Nordea. A couple of questions from me. First of all, the scope of the agreement you have with Scheffler is around 1,000 units over a five-year period. If you look at the other potential customers you have in the pipeline, you talked about a handful that's not announced. Is 1,000 units kind of a normal level, would you say? Or can you help us scope a little bit what the opportunity is from the other players out there?

So with other players we are having pilot trials in applications that are not communicated. There are no agreements such of any volume with anyone else that we haven't communicated. So that I want to be clear about. But of course we are discussing and if you talk to some customers it could be a smaller number of course if they are single plant operators or smaller manufacturing sites, but we have also talked to other potential customers that would have a much larger number of units as well. So it's difficult to say what's the normal discussion level.

Perfect, thank you very much. And my second question also, it looks like the underlying cost X Robotics on the group the group holding costs was slightly higher than in prior year. Could you help us a little bit to guide us what the group costs holding costs would be on a run rate basis on an EBITDA level or an EBIT1 level or however you want to frame it for the rest of the year? What's normal there?

Maybe, yeah, maybe I can help you. Yes, there is a little bit of increased cost for provisions that we took in the quarter. And so it's on the kind of elevated side. So you should not use that one to extrapolate that. When we kind of published what the number, I mean, there are a number of things that happened at the group level. So probably in the area, I mean, it's definitely less than 10 million.

So maybe around the 5 million mark that one could adjust out from that.

Perfect. Thank you very much.

Thank you.

Thank you. That concludes the Q&A for today. I will now hand back to Anders for any final remarks.

Thank you, operator. And thank you, everyone, for participating today and engaging with questions. So we at Hexagon would like to wish you all a nice summer break. And be safe and see you back soon for the third quarter report. Bye-bye.

Thank you. This concludes today's conference call. Thanks for participating. You may now disconnect.