Burckhardt Compression Stock

Ladies and gentlemen, welcome to the Burckhardt Half Year 2026 Results Live Webcast. I am Valentina, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Fabrice Billard, CEO. Please go ahead.

Yes. Thank you, Valentina. Good morning, ladies and gentlemen. This is Fabrice Billard speaking. I'm here together with Rolf Brandli, and we would like to warmly welcome you. Today, we'll present the results for the first half of fiscal year 2026, starting with the market environment and our key highlights before taking you through the operational and financial performance of the group, and then concluding with our outlook.

The first half was marked by continued geopolitical and macroeconomic uncertainty as we read in the papers every day. Amid this backdrop, we returned to order growth in both divisions. We maintained underlying profitability, despite lower sales, and we continue to see attractive opportunities across our markets.

Assuming that you've already read the disclaimer on Slide 2, I will jump directly to the highlights on Slide 5. First, order intake returned to growth, increasing by 5.4% to CHF 422.5 million with growth in both divisions. This is particularly encouraging considering the continuous uncertainty and temporary disruption in some of our markets. Sales decreased by 11.1% to CHF 459 million as expected, and reflects the lower opening order backlog following the record levels of previous years as well as the phasing of project deliveries. So the lower sales should not be interpreted as deterioration in demand.

Profitability remains resilient with reported EBIT margin at 12.1%. This includes CHF 3.4 million of one-off restructuring costs linked to our August announcement. Excluding these costs, the underlying EBIT margin was 12.8%, basically in line with the 12.7% achieved in the prior year period. We also continue to generate strong value with RONOA increasing to 40.1%, well above our midrange ambition, which is 25% plus.

And finally, we confirm our guidance for fiscal year 2026. We continue to expect stronger sales in the second half, supported by our current order backlog and scheduled deliveries.

Let's now look more closely at the development of order intake on the next slide. After a significant reduction in order intake last year, both divisions have now returned to growth and several factors supported this development. Firstly, we saw lower tariff-related uncertainty compared with last year. As you remember, this was the main effect in our results of last year. Secondly, in Systems, we continue to benefit from our strong marine position, and we entered new applications to compensate for the current market disruption. Thirdly, in Services, we secured several large orders in Asia. And finally, the Fornovo Gas acquisition provided additional support.

What is important to highlight here is that growth in the period was not driven by one single market or application, reflecting the diversification of our business and our continued commercial activities across different markets. Nevertheless, the environment remains challenging for our customers and therefore, for us due to the conflict in the Middle East. At the same time, this conflict creates opportunities associated with energy security, which I will explain on the next slide.

So let me spend a couple of minutes on the Middle East situation because its impact differs significantly across our businesses. When I look at Systems in the region of Middle East, projects currently under execution are largely unaffected, and they continue. At the same time, we see opportunities related to new investment in infrastructure and alternative transportation routes. We see, for instance, a potential project to expand the export terminal infrastructure in Fujairah in the UAE and also a Phase 2 project for Marsa LNG in Oman.

In Services in the region, the short-term impact is more direct and quite negative. Several petrochemical refinery LNG sites in the region are operating at reduced or unstable levels. As you will hear in the news that the oil is flowing again, but the petrochemical products, chemical products, et cetera, are not. So this reduces compressor operating hours and consequently delays maintenance overall and service activities. So we expect this activity to recover progressively once the situation normalizes.

There is also an indirect but material effect in Asia, especially in China for both divisions. Reduced feedstock availability affects refinery petrochemical activities and has contributed to postponement of investment decisions and service activities in our key markets. At the same time, we see opportunities developing also in the region, especially in China, in areas such as coal-to-olefin, which means producing petrochemical products out of coal instead of oil because it supports China's energy independence. There are at least 4 new project opportunities in the final decision phase for this application.

So the key message here is that the conflict is creating a very clear short-term order intake headwind in both divisions, while at the same time, reinforcing the strategic importance of energy infrastructure and opening new opportunities for Systems in the coming years in the regions, but also in Asia.

Let's now dig deeper into our order intake and looking at the different market segments on the next slide. The picture remains quite diverse. In Petrochemical and Chemical, the Chinese market continues to be affected by overcapacity, which we had before and reduced feedstock availability, as I just explained. On the other hand, demand for polyolefin in India remains healthy, and we continue to see future project opportunities outside China. Gas Transportation and Storage remain one of our strongest markets. LNG and LPG, marine and onshore activity continues at a good level, supported by the global requirements to transport, trade and store energy.

In Hydrogen Mobility and Energy, the development is geographically mixed. Europe continues to show positive momentum, while the Chinese market has slowed significantly. The Industrial Gas market is overall stable at rather low level due to the lacking investment -- the lack of investments in new polysilicon capacity. But we have entered a new application with ultra-high purity hydrogen for semiconductor manufacturing in Taiwan and Korea. I will come back to this later.

Traditional Refinery investments remain selective, also disrupted by the Middle East conflict, but sustainable aviation fuels helped to maintain the market level. The Gas Gathering and Processing segment continues to provide opportunities across several regions, and we are growing in this segment, thanks to Fornovo Gas.

In conclusion for this slide, there is no single market direction. Our diversified exposure across applications and geographies continues to be an important strength.

Against this volatile backdrop on the next slide, we have continued to actively adjust our cost base rather than wait for markets to normalize. Our fundamental setup remains resilient. We still have a supportive and sizable backlog, diversified end markets, new opportunities emerging and increasing installed base and services, regional supply chains and a global footprint with significant local value added that makes us more stable. Last year, we already implemented targeted cost reductions, as I communicated a couple of times. We reduced external and temporary workers. We restructured hiring, simplified global functions and increased outsourcing.

This year, we have taken further structural measures. As announced in August, we are reducing 220 positions, including around 150 in Switzerland. At the same time, we are further developing our Global Service Center in India, localizing selected products and components in China and India, and we are continuing our Fit4Growth operational excellence program in Switzerland.

The half year results include CHF 3.4 million of restructuring costs. And based on current volumes, we expect these measures to generate approximately CHF 20 million in annual savings from fiscal year 2027 onwards. So these are not only short-term mitigation measures that we've just implemented, they structurally improve our competitiveness and they prepare the organization for profitable growth when the market conditions improve.

So let's now dig deeper into the 2 divisions with the operational review, starting with Systems. Order intake increased by 6.3% to CHF 260.9 million. Net of currency effect and the Fornovo Gas acquisition, growth was 3%. This development was supported by the strong marine market and by our success in developing new applications, including CO2 transportation and the semiconductor manufacturing application.

Sales declined by 15.2% to CHF 321.1 million (sic) [ CHF 320.1 million ] as expected due to the lower operating backlog following the record levels of previous years and due to the expected project delivery schedules. The gross margin declined by slightly by 0.5 percentage points to 20.6%. Lower capacity utilization was largely offset by operational excellence and our continuous cost optimization measures.

So despite lower sales and the restructuring costs, Systems maintained a double-digit EBIT margin of 10.3%, actually slightly above last year's 10.2%. That was really an excellent achievement by the team in this context.

Now on the next slide, we see beyond the numbers, we continue to execute our strategy, and you know this slide by now, and we continue to improve both our competitiveness and growth potential. The new division President, Daniel Meier, who was leading the region EMEA until now, will continue in the same direction.

On our core business, we have expanded our marine offering with the launch of the new Boil-Off Gas 100 compressor, which I will introduce in a couple of slides.

On operational excellence, Fit4Growth continues in Switzerland, while we are adapting the workforce to the expected workload and further strengthening our capabilities in India. At the same time, we're opening new growth avenues, including the Fornovo Gas acquisition, which gives us immediate access to biogas and biomethane applications, and we have order wins in new applications, including CO2 transportation by ship, ultra-high purity hydrogen for semiconductor and gas turbine testing.

So these examples are important because they demonstrate that we are not relying on the recovery of our traditional markets. We are actively broadening the application base for our technology.

But let me now give you a couple of more concrete examples, starting with Fornovo Gas. We completed the acquisition of Fornovo Gas in July, giving us immediate access to the European biogas and biomethane market, which we estimate at about CHF 200 million. You can see on the right of the slide, the type of projects that the company is delivering with an example of a biomethane project awarded to Fornovo Gas in Ireland.

Our ambition here is not simply to grow the existing European activity. We see the potential to leverage our global sales and service presence to make these solutions available more broadly over time. And concretely, since July, more than 70 customer requests for quotations have already been generated through our global network, and we won the first joint project. So this gives us an early indication of the cross-selling synergies we can create. So Fornovo Gas add an attractive application to our portfolio and gives us another platform for profitable growth.

Let me move to another example of how we are enlarging our addressable market. We often mentioned the R&D activities we have in marine. And here, you see some output out of it. We've launched the new Boil-Off Gas 100 2.0 compressor for LNG-fueled merchant ships with focus on container ships. This is not simply another compressor. This product allows us to address the broader part of the CHF 80 million to CHF 100 million LNG-fueled merchant ship market by competing more effectively with alternative technologies. This compressor has lower total cost of ownership than alternatives based on 3 points.

First, compared with the previous generation of compressors, this new one offers 10% to 15% higher efficiency. Second, this compact and oil-free design simplifies the operations for the owners and the maintenance onboard of the vessel. And third and really critical here, if we compare with compressor alternatives, which dominates this market, fuel consumption is around 40% to 50% lower, thanks to our ability to handle very cold gases. This is critical because energy onboard of a ship is very expensive. So we received first very positive response from the market about this compressor. And this has really enabled -- or this will enable us to expand the additional market by competing with other technologies.

And finally, as another example, to further grow our addressable market on the next slide, we are also successfully transferring our hydrogen compression expertise into new industrial applications. Semiconductor manufacturing is clearly a growing market, supported by the continued expansion of artificial intelligence, data centers and digital infrastructure. It requires hydrogen across several production steps with very demanding requirements regarding purity, safety and reliability. And these requirements are well aligned with our existing Diaphragm Compressor technology. So we have already sold 11 compressors to 2 customers in Taiwan and Korea. In this case, we have increased our addressable market, not with innovation, but with business development using our recognized brand name and our technology to open doors and create new opportunities.

So wrapping up the first part on the Systems Division, while hoping that the disruptions linked to the Strait of Hormuz will cease soon, we will continue to manage our cost base, expand our addressable market through innovation and business development, and we will search for selective bolt-on acquisitions, which are strategically compelling.

Moving now to Services. Order intake increased by 4.1% to CHF 161.6 million, despite the temporary disruption of the Middle East and parts of Asia. This was supported by further growth in marine and several large orders in Asia. Sales remained stable at CHF 138.9 million. The gross margin decreased by 0.7 percentage points to 47.1%.

There are 2 main operational reasons behind this. The first, a less favorable product mix; and second, the reduced capacity utilization in some service locations. Restructuring costs also affected the margin. As a consequence, EBIT amounted to CHF 30.1 million, and the EBIT margin decreased from 23.9% to 21.6%. Nevertheless, an EBIT margin above 20% in this environment demonstrates the fundamental quality of our Service business. And importantly, the underlying installed base growth remains intact. In Middle East and Asia, we expect maintenance activities to recover progressively as the situation around the Strait of Hormuz normalizes.

Also in the Service Division, we continue to strengthen the foundations for future growth. The integration of ACT into our organization is now completed, strengthening our local manufacturing and service capabilities in the U.S. We are also investing in operational excellence, including the modernization of our manufacturing capabilities for rings and valves, including our first 3D printed parts delivered to customers and further modernization and optimization in our factories.

At the same time, we continue to develop digital and recurring service offerings. This includes AI-supported monitoring solutions as well as additional long-term service agreements. I will show a good example in a minute. Finally, the rollout of our global CRM and SAP platform continues to strengthen the way we manage our business globally.

What I would like to highlight today in the Services Division is one of the structural growth opportunities, increasing the share of our installed base covered by long-term agreements. We regularly state that the growth of our marine business is supporting the growth of the Services Division and often compensating for other segments which are disrupted. And to make this more concrete today, let me share an example on the right side of the slide.

In H1, one of our shipowner who has 9 high-pressure LNG carriers and 30 Laby-GI compressors has renewed a 5-year long-term service agreement, LTSA, after we successfully completed the initial agreement. The value proposition is very tangible for the customer. The compressor availability was above 97%, supported by condition monitoring, predictive maintenance and advanced spare parts planning. For Burckhardt Compression, these agreements deepen the customer relationship and increase the visibility and the recurring nature of service revenues.

As you can see from the chart on the left, the number of compressors covered by long-term service or framework agreements has increased significantly over the last years, and we now cover more than 80% of the fleet with such agreements. This is exactly the type of business we want to continue expanding, especially in the marine segment.

This concludes my first part, and I would like now to hand over to Rolf for the finance section.

Thank you, Fabrice. Good morning, and welcome also from my side. On the next 3 slides, I will cover the group financials, starting with the income statement. Total order intake increased by 5.4% to CHF 422.5 million, with positive contributions from both divisions. Adjusted for a 0.5 percentage point tailwind from currency translation and a 2 percentage point contribution from the Fornovo Gas acquisition, organic growth remained solid at 2.9%.

Sales declined by 11.1% to CHF 459 million, excluding a 0.4 percentage point positive currency translation effects and 2.1 percentage point contribution from Fornovo Gas, organic decline was 13.6%. As Fabrice explained, this reflects the lower opening order backlog after the record levels of previous years and the expected timing of project deliveries.

Gross profit reached CHF 131.4 million, corresponding to a margin of 28.6%. The 0.3 percentage point improvement mainly reflects the higher share of the Service in the sales mix. Selling, general and admin expenses remained stable at CHF 63.4 million. Due to the lower sales base, however, they increased from 12.3% to 13.8% as a percentage of sales. Research and development expenses decreased by CHF 2.5 million to CHF 12.7 million or 2.8% of sales, which compares to 2.9% in the prior year.

Activities remained focused on marine applications, digital solutions as well as new applications. Other operating income was CHF 0.9 million, compared with an expense of CHF 2.1 million in the prior year, mainly due to foreign exchange effects.

EBIT amounted to CHF 55.5 million, resulting in a reported margin of 12.1%, compared with CHF 65.5 million and 12.7% in the prior year. The current period result includes CHF 3.4 million one-off restructuring costs. And excluding these costs, as margin -- as Fabrice has mentioned already, the margin was 12.8%, which is broadly in line with the prior year.

Higher financial income partly offset the lower operating profit, while the effective tax rate increased from 23.3% to 24.9%. Net income, therefore, amounted to CHF 43 million, compared with CHF 48.7 million in the prior year, and earnings per share were CHF 12.74. Overall, underlying profitability remained resilient despite lower sales and temporarily disruptive market environment.

Turning to the summarized cash flow statement. Cash flow from operating activities increased to CHF 59.9 million from CHF 30.3 million in the prior year, supported by positive development in accounts receivables, thanks to strong cash collection. Cash from investing activities was minus CHF 36.4 million, mainly reflecting maintenance and IT CapEx and the acquisition of Fornovo Gas in Italy. Cash flow from financing activities was minus CHF 63.9 million, mainly due to the CHF 60.9 million dividend distribution, which is broadly in line with the prior year.

Currency translation difference contributed positively with CHF 14.5 million, mainly from cash positions held by subsidiaries in China and other locations outside Switzerland. As a result, the group's cash position stood at CHF 237.1 million at the end of September. Borrowings remained broadly stable at CHF 152.2 million, which is mainly comprising the CHF 150 million bonds, which has a term until September 2028.

The group, therefore, ended the first half with a positive net financial position of CHF 84.9 million. That compares to CHF 6.3 million in the prior year. Overall, strong operating cash flow further strengthened our financial position and flexibility, despite the dividend payment and the acquisition we made in the reporting period.

Let me conclude with the balance sheet, which remains on a solid footing. Property, plant and equipment increased moderately to CHF 179.5 million from CHF 172 million in the prior year. That includes CHF 7.5 million coming in from the Fornovo Gas acquisition. Inventories decreased by CHF 71.4 million to CHF 366.8 million, mainly due to lower work in progress as more projects from the high order backlog were completed and delivered.

Customer advance payments normalized to CHF 271.5 million. Projects remained more than fully prefinanced by customers with a positive net balance of CHF 36.6 million after work in progress and advance payments to suppliers. Trade receivables decreased by CHF 16 million to CHF 254.9 million, reflecting our continued collection efforts. Receivables overdue more than 90 days increased to 40.8% from 37.8%, while the absolute overdue amount remained broadly stable at a high level.

Shareholders' equity increased by CHF 33.9 million to CHF 337.7 million, mainly due to net income and positive currency translation effects, partly offset by the dividend and the goodwill from the Fornovo Gas acquisition. Accordingly, the equity ratio improved by 3.1 percentage points to 29.2%. The balance sheet total remained broadly stable at CHF 1.16 billion.

In summary, the positive net financial position, higher equity ratio and continued customer prefinancing provide a solid foundation for the group's strategic development. Thank you for your attention.

With that, I hand back to Fabrice.

Thank you, Rolf. Let me conclude with our outlook. I mean, with this positive half year, we confirm our fiscal year 2026 guidance of CHF 900 million to CHF 1 billion in sales and an EBIT margin of around 12%. Actually, when we originally set this guidance, one of our assumptions that we communicated in June was that the Middle East situation would normalize during the second half. Today, this assumption has changed, and we expect market disruptions to continue because there is really no sign of improvement. Nevertheless, several other developments give us confidence to maintain the guidance.

First, the current order backlog and scheduled project deliveries provide visibility for higher sales in the second half. Second, we have implemented measures to structurally optimize our cost base. They will start to have a positive effect in Q4 of this fiscal year. And third, we continue to see new market opportunities, and we expect further commercial synergies from Fornovo Gas.

So while the mix of assumptions behind our guidance has changed, our expectation for the full year has not. Of course, the outlook remains subject to geopolitical developments and other global or regional disruptions.

Looking now beyond the current disruptions, the fundamental drivers of our markets remain intact. Our business continues to benefit from 3 structural megatrends, which you know by now. First, population growth continues to increase demand for energy, transportation, chemicals, polymers and industrial gases. Second, energy security is becoming increasingly important. Despite creating market uncertainty in the short-term, the blockade of the Strait of Hormuz has further increased the strategic importance and urgency for governments globally to invest in additional energy infrastructure. This includes LNG and LPG storage, gas pipelines and transportation infrastructure, ships, which are applications where we play a leading role. The Middle East countries with an access to shipping routes other than the Strait of Hormuz, meaning Oman, UAE, Saudi are also planning new investments in refineries and petrochemical plants.

Third, the energy transition continues to require new infrastructure and technologies. The examples we mentioned today, from biogas to CO2 transportation demonstrate how we are positioning ourselves in these growing markets. So together with the measures we are taking to strengthen our cost competitiveness, these opportunities also provide the basis for our Mid-Range Plan ambition of around CHF 1.2 billion in sales and an EBIT margin of 12% to 15%.

Thank you for your attention this morning. With this, we open the floor for questions, which Sandro will take and give to Rolf and to myself.

The first question for you, Fabrice. The question is, what can we expect in terms of order trends for the group and the division into H2?

Well, as you know, we don't give order intake guidance, especially not in such a volatile environment. So it's hard to say. I mean on the -- I mentioned all these positive factors which we have. We have the marine business, which continues to be good. We have a number of hyper projects in the pipeline, but the timing is a bit unclear. We have improved regional coverage, new applications. We have Fornovo Gas, where we see synergies. So a number of positive aspects. But at the same time, we have a big uncertainty in the market, in the geopolitical situation, and that makes the decision on large projects difficult for our customers.

So if they come, then it could all come good. If they postpone further because new things happen, then it will be more difficult. So hard to say exactly when the timing of the recovery will come. It's really linked to the disruptions.

And following the first question of [Indiscernible], in June, you said about 3/4 of the guidance midpoint was in backlog at the start of the year. Where does the low end of the range in the geopolitical backdrop if the geopolitical backdrop doesn't normalize?

Well, it sits at the lower range of our guidance, which is CHF 900 million, and actually, if you look at the backlog, it should be slightly more very logically, but we don't know what Trump will do this week in Iran, what it will mean, and that's why we remain prudent. So that's why we didn't change the backlog. A number of things can still happen in the world and the lower point is CHF 900 million. As you see from the figures, we are well on track to reach the midpoint. That would be the logical conclusion of this half year figures and what we see in the backlog, but we still want to keep the lower end at CHF 900 million, just to be on the safe side.

Thank you very much. And then a final question, by when should the structural order growth in Services come back?

Again, it's linked to the disruptions. If you look at the Middle East, we have about almost 40% of our business there, which is stopped at the moment because the facilities, the refineries, petrochemical plants are running at 40%, 50% reduced capacity. So that's really a hit that will come when the situation improves. And the additional impact in Asia will come to that. So I mean the main impact will be this recovery when the situation improves. And then the continuation of the structural growth linked to the installed base continues in an underlying way, I would say, just like you've seen with the marine business, with the long-term service agreement, that will certainly continue. But at the moment, it's just about compensating the short-term impact.

Thank you, Fabrice. The next question would be for Rolf. I think we partially answered this question already, but we can repeat it. Can you split the 2.5 percentage points gap between reported and organic sales growth into ACT, Fornovo Gas and FX?

I can certainly give that information. The FX effect accounts for 0.4 percentage points and 2.1 percentage points is the effect from the Fornovo Gas acquisition.

Thank you very much. And then the follow-up question was also, what revenue run rate should we assume for Fornovo Gas for the rest of the fiscal year?

Right. So far in the first half, we have about CHF 10.5 million from Fornovo Gas, overall sales contribution that for about 2.5 months. Extrapolate that that ended up close to [ CHF 60 million ] run rate when we acquired it was between CHF 40 million and CHF 50 million depending on the year.

To Rolf then, another question from Fabian Piasta from Jefferies.

In your last call, you provided some granularity on the order pipeline, most projects rather pushed than canceled. Can we have an update here?

Maybe Fabrice, you can take the question.

Yes, indeed. I mentioned how the pipeline for big projects was evolving. I mentioned at that time that we had 15 large projects in the pipeline for sales in September last year, so just 1 year ago. And in June, most of it was still here and -- but not yet decided by customers.

Now the update is as such, I mean, the 15 projects, they were representing CHF 340 million, just 15 projects, CHF 340 million of potential business to come in the following 18 months. And today, I can say that we have won 4 of these 15 projects represents about CHF 80 million to CHF 90 million. We have lost none of them to competitors, very important. There were 3 canceled, really 20% of the projects were canceled. And that means that the remaining 8 are still in the pipeline. They are mostly hyper projects in China, marine projects and Middle East projects. And overall, from the CHF 340 million, we still have 1 year later, CHF 200 million remaining out of these 8 projects.

So this is really what we see, and that's why it's hard to give a guidance on order intake because this project, they are here. Customers are about to decide and they're still working on them, but they are not pressing the button. And hopefully, probably they wait for a bit more stability to press the button.

Thank you very much. Then another question for you, Fabrice. Can you give indication how pricing dynamics are evolving in this environment?

Pricing dynamics are rather, let's say, challenging because the market is overall tense. So we have more pressure on the pricing side. At the same time, in the applications where we grow like marine, with our new compressors, there, we still enjoy very large market share. You remember on LPG, we have more or less LPG tankers, we have more or less 100% market share. LNG tankers with high pressure, we also have 100% market share. Merchant ships, we can now gain market share with our new compressors. So overall, that's our way to fight this because when we have this kind of market shares, we are not -- the pricing is there, not affected. It's more in the refinery segment, for instance, industrial gases, gas gathering and processing, that there the pricing competition is higher, but these are also the smaller segments for us.

Another question for you, Fabrice, regarding order intake. The question comes from Christian Salis from Cantor Fitzgerald.

Now that order intake seems to have reached a positive inflection point, when can we expect sales to follow suit, for example, return to growth again?

Here, I mean, we'll give the guidance next year for the sales. But you see that we are still consuming backlog. So it will take some time before we come back to sales growth. Again, we'll say more in June when we see the backlog.

And then there's a similar question coming from Andreas von Arx from ZKB.

In H1, orders point to an annual sales level of CHF 800 million to CHF 900 million. This is significantly below, first, the midterm CHF 1.2 billion target, and second, current midterm consensus of CHF 1 billion. What do you see as key pillars to close the gap? And how good do you see midterm visibility today to reach these high levels?

Indeed, this is clearly lower, and that's why we have not put a timing on the Mid-Range Plan. How do we see the gap? I mean, that comes back, maybe I can link that to the previous question. We have just CHF 200 million of large projects waiting for customers to decide and that already could close the gap, plus the Service business stopped more or less in Middle East, plus all the customers in Asia are waiting. So -- and then plus all the new opportunities that we -- that are created on the positive side by the Strait of Hormuz, energy security in the coming years will become an even more important topic for investment.

I mean, just like defense has been a growing topic in the past, not for us, but overall for the year, as priority for the governments. Defense was a key topic in the last 3 years and energy security becomes a key topic for the governments in the next 3 years or more because they see the impact on the population when the oil is not flowing, when the petrochemical products are not flowing, when diesel is not flowing. So I think this megatrend will create the market dynamic to reach the CHF 1 billion to CHF 1.2 billion. Again, as soon as customers feel that there is enough stability to invest, which is the question mark at the moment.

Thank you very much. Then we received many questions about the margin outlook for the second half. The main question was your margin outlook is conservative. Are there any specific factors why margins should be lower in the second half? Maybe Rolf can take this question.

Yes, it's a good question. I mean, in the second half, there should be a benefit from the higher sales and a better service mix within the sales mix by Service share. On the other hand, we expect also a less favorable sales mix in the Systems Division and uncertainty remains also around the regional capacity utilization. So with all that, overall, a 12% approximate EBIT margin remains an appropriate expectation.

Thank you, Rolf. And then the final question also goes into the financial section. So maybe you can also take that. The question is from Andreas von Arx from ZKB.

Are the reductions in R&D and CapEx just temporary adjustments in H1? Or is this structural? What is the CapEx guidance for 2026 and 2027 fiscal year?

We have no intention to lower our efforts, and therefore also not the expenses. These are also not linear expenses. They do not occur month by month on an equal amount. So the CHF 2.5 million less investments compared to last year, not a major change. No, we have no intention to lower that. It's not structural. On the CapEx side, we expect CHF 20 million to CHF 25 million maintenance CapEx per year. And on top of that, we mentioned that also during our Capital Market Day a couple of years back, we have about CHF 12 million to CHF 30 million investments in additional manufacturing capacity. As we speak, we are about to build a new factory in India. And we also do some IT investments. Fabrice mentioned earlier, we have an ERP rollout going on, but that's approximate CHF 20 million to CHF 25 million regular maintenance CapEx per year. Maybe a bit high level of depreciation.

What you could add as well on the R&D is that the guidance that we've given that we will spend around 2.5% to 3% of sales in R&D, that remains. So if sales go down, we will adapt. We will postpone a couple of projects so that we spend the money that we afford. But it's not a structural change. It's just a temporary change to adapt to the sales level.

And we just received one more question from Laurent Juban from Octavian. The question is for Fabrice.

Do you expect that marine momentum to continue in H2? And how confident are you of keeping the business margin above 10% in fiscal year '26?

Yes, indeed, the marine business is very active. Shipowners earn a lot of money at the moment. When they rent, I mean, for instance, the oil carrier, the price to ship oil from Middle East to U.S., I just read this week, moved from around CHF 1 million to CHF 2 million before the war to more than CHF 30 million. And this money is just flowing to the shipowners. And so they get a lot of cash. And these shipowners, especially the family shipowners, there are many of them. Typically, when they have cash, they reinvest in ship that's their wealth, the way they manage their family business. That's why we expect some additional ship orders in the coming years. It also that goes together with the fact that LNG will continue apparently longer than what we expected maybe 5 years ago, where we expected LNG to peak around 2030. Now it looks like it will last longer. So there will be a need for more ships.

These ships need to be more efficient to reduce CO2 and methane emissions, and that's why they will scrap some old ships and invest in new ships. So that's rather positive on the LPG, also, it's rather positive for the next 6 months. So that's positive.

On the question that remains here, as you know, is -- and it's for us important is the decision on the technology for LNG tankers. High pressure engine on LNG tankers are great for us because we have 100% market share for the corresponding compressor. Low-pressure LNG tanker is more difficult for us. We have some products, but not very competitive.

And here, the decision is we still -- I mean, we still have some customers really wanting to invest in high pressure. And maybe we see some good news here in the coming 6 months, but somehow the market has not fully decided what they want to do here. And that's one of the main factors for an upside on our order intake side.

On the margin?

On the margin of 10%, sorry. Here, we have at the moment a very good product mix in the sales. And we also had until last month, quite some very good capacity utilization. And the good product mix is linked to the deliveries of LPG compressors. We should continue the next couple of months, but then we cannot count on such a good product mix for the next 6 months and for next year. So we would be careful. I would not promise that it will stay at that level, which is the reason why we remain careful on H2 as well.

Okay. There are no more questions at this time. Okay.

And thank you very much. I mean, let me wrap up quickly about the key messages for today. Order intake returned to growth in both divisions, and we managed to compensate the short-term disruptions on the Systems side by entering new applications, on the Services side by leveraging our installed base. We have lower sales, and they reflect the lower opening backlog and the expected project phasing rather than a deterioration in demand.

The underlying EBIT margin remains stable at 12.8%, excluding restructuring costs versus 12.7% last year. We are reducing our cost base with approximately CHF 20 million of annual savings expected from fiscal year 2027 onwards. And we have been delivering strong operating cash flow and robust -- and we still had a very robust financial position despite the high dividends and the acquisition of Fornovo Gas.

That will conclude our presentation today. Thank you very much for your presence and for your questions. Have a good day.

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Good morning, ladies and gentlemen, and a warm welcome for the ones joining us here in the room or the ones joining us online. Today, Rolf and I will present you the results of fiscal year 2025 and outline our assumptions for fiscal year '26 and for the midrange plan. Before I begin, I assume that everyone has read the disclaimer on Page 2. And I will start directly with Page 4, starting with the highlights and market developments. Fiscal year 2025 was marked by a challenging environment, the headwinds clearly affected our order intake, but we could again reach record results, which highlights the strength of our delivery capabilities.

Following a strong fiscal year 2024, order intake amounted to CHF 784 million, down 32% year-on-year or minus 27% net of currency translation effects. This reflects the significant market disruptions and the project deferrals across our market segments. Then supported by a strong order backlog at the start of the year, sales reached CHF 1.057 billion, down 3.5%, but actually up 1.3% net of currency translation effects. We further improved our EBIT margin to 13.3%. And we reached with this a new record operating income with CHF 141 million and the new record net income with CHF 110 million, up 4.3%. RONOA increased again to 40.4%, highlighting the value creation from disciplined CapEx management and net working capital management. For fiscal year 2026, we are guiding for sales between CHF 900 million and CHF 1 billion and an EBIT margin around 12% with the stronger sales in the second part of the year, and I'll come back to it later.

Regarding our midrange plan, the achievement of the CHF 1.2 billion milestone remains but is delayed by the current market disruptions.

We will communicate the new timing once the market visibility improves. I'll come back to that as well. So let me now set the macroeconomic context. With Liberation Day on April 2, 2025, the second day of the fiscal year. This fiscal year was really shaped by the U.S. tariffs and the impact on the Swiss franc and on our customers. The market was becoming even more uncertain with the war in the Middle East in the last months of the year, which happens to be our strongest typically.

In the Systems division, most regions and segments were affected by these deferred investment decisions. The petrochemical was the most affected, especially in China, where tariff uncertainties have affected both the feedstock and the flow of petrochemical products. In the Services division, customers protected their cash and profits by delaying as much as they could, procuring spare parts and upgrading compressors. In addition, security and logistics constraints, have led some plans to stop and therefore, reducing compressor utilization.

On the positive side, the U.S. service market developed well. supported by energy requirements for data centers and also for LNG exports to Europe. At present, we expect conditions to improve in the second part of the fiscal year 2026, especially in the Services division because customers can't postpone procuring spare parts too long. We've seen that with a big catch-up after the COVID pandemic. Now turning to Slide #7 and looking at the impact on the different market segments, as you can see from the arrows going up and down, 4 segments were negatively affected, and 2 went up.

Starting with Petrochemical & Chemicals, which is typically our largest segment. It was the most affected. China, especially was facing overcapacity that was still existing last time we talked. But on top of that, the uncertainty led customers to wait to invest further. And projects in Middle East were further postponed, The one bright spot was India, which continued to grow. In Gas Transportation & Storage, the pipeline remained lively for LNG tankers. even if some decisions were deferred. Uncertainty linked to the IMO regulations remain and therefore, customers are still buying a majority of low-pressure LNG tankers rather than the high-pressure ones for which we have a leadership market position. LPG tankers orders remain at a good level. The Hydrogen mobility and energy segment declined clearly in the U.S. after the removals of supportive government measures, China remained very lively, supported by the government.

In Europe, it was a year still at a low level, but we see now that the regulations are getting enforced and we see, especially in Germany and the Nordics, that the project activity is increasing. Coming now to the growing segments. First, the Refinery segment. We saw there limited new investment in traditional refineries. But we saw a big momentum for sustainable aviation fuel refineries. And this is an application where we've been particularly successful and it's more than compensated for the traditional refineries.

Gas gathering and processing remains very active, particularly in the U.S., Middle East and Africa. Biogas also which I mentioned a few times before, was also gaining traction, which makes us very excited about the acquisition of Fornovo Gas, which I will comment later on. Now let's step back and look at our fiscal year 2025 in the longer-term perspective. Over the past 8 years, our sales have grown by 6.5% per year in Swiss franc or 8.5% per year in net in the local currencies. And we've increased our EBIT margin by 13.7% per year on average. This performance was achieved despite currency fluctuations, the COVID pandemic, the Ukraine conflict and now the U.S. tariffs.

Compared to 2018, now if I compare the company, how we are now versus then, we have a much let's say a more resilient setup. We have a broader product and service portfolio, covering our marine, hydrogen, high-speed, the diaphragm compressors, we didn't have that at that time or much more limited. We also have more services, including digital ones. So now if we try to anticipate our future financials, it's worth looking at the 2 curves of order intake and sales. We see clearly on the graph that in the past 5 years, we had a book-to-bill ratio above 1, even clearly above 1 in the past 4 years.

And with that, we've accumulated a sizable order backlog which we can continue to deliver in fiscal year '26 and '27. And one special aspect in our business when the backlog decreases, we see the factories are getting free, 1 year in advance, 1.5 years in advance. And with that, we can offer shorter delivery times so that the sales can pick up quicker than order intake has been increasing, actually. These factors underscore the resilience of our business model and our ability to deliver growth through cycles.

However, the market disruptions are expected to continue in the next months. And with this, the recovery will most probably not be fast enough for us to reach the CHF 1.2 billion milestone in 2027. In the meantime, that means that we need to continue to adapt to the lower order intake level, brings me to the next slide. In the current market conditions, we benefit from a resilient setup, as I just highlighted. We are also implementing mitigation measures to strengthen our competitiveness and protect our profitability.

In fiscal year 2024, I communicated that at that time. Our first response was to accelerate mid-range plan initiatives that improve competitiveness and specific initiatives for growth to compensate for the lower market. In fiscal year 2025, I also highlighted at the half year, we had additional measures including targeted cost reductions in certain countries and functions. Also workload-based reductions of external and temporary workers. We restricted new hires globally. And we have a simplification of the global functions in the Systems division. We also increased our outsourcing to be less dependent on the Swiss franc, which continues to increase.

Now looking ahead for fiscal year 2026, we will certainly have similar mitigation measures during the year. And we will design these measures so that they don't prevent us to recover as when the market recovers. Let me now highlight a few milestones for the year. And I start with 1 of these competitive measures, which is the Fit4Growth program in Winterthur. It has been accelerated in fiscal year 2025. And it helps our factory in Winterthur to remain competitive in the future.

On the supply -- supply side, for instance, we've implemented a clear portfolio of activities that we keep in-house versus the ones that we outsource. And this has delivered 5% to 20% savings on parts that we have decided to outsource. And that's with this, we reduced also the dependency on the Swiss franc, and we have a more resilient supply chain with a clear dual sourcing for all parts. We are also securing our in-house core competencies and innovation capabilities and now modernizing our machine park to be more efficient.

The last point on the K-Laby1 assembly line, which is -- these compressors are the ones that we deliver, especially for LPG tankers, ammonia tankers, and there was a big volume of these compressors. We are implementing an improved flow line and also some automation that will enable us to increase the capacity to 500 compressors per year, and we expect a reduction of labor costs and of lead time by at least 30% as well as a reduction of the footprint for these compressors by around 10%. So all this makes our Swiss factory more competitive for the future.

I would like to highlight 1 order, which shows how we develop in the Marine segment and how we protect our market leadership there. We won our largest ever marine order during the year. It was for Hanwha Ocean, the shipyard. It was for 14 large compressors for boil-off gas and fuel-gas injections, the one that we know for high-pressure LNG tankers. And they will equip 7 new generation LNG tankers. And what makes this order particularly significant that it is based on the new compressor platform, which is -- which we've developed with the R&D cost we always mentioned, this is for marine.

One of the key output of this R&D cost is this new compressor platform, more competitive, also designed for the latest LNG tankers, which have a lower boil-off rates, meaning they require a slightly less large compressor. In addition, we've increased the discharge pressure from 300 bar to 330 bar, which increases the efficiency of the engine and lowers the CO2 footprint. Important as well for us, this compressor has been developed together with Everllence. And with that, we could optimize the overall system for the LNG tanker. That helps the shipyards and then the ship owners to reduce, especially energy consumption and the CO2 footprint of these compressors.

So this order, I mentioned it because it really highlights our ability to innovate and continue to be on the leading edge on the Marine segment. Now let's move to highlights on the Services division. In fiscal year 2025, we have significantly improved or increased our footprint with 9 new locations. In the U.S., for instance, we relocated our workshop in the Northeast closer to customers. And through the acquisition of ACT, we gained 2 new locations, 1 close to Chicago, the other 1 close to Houston. We also set new service centers in the so-called white spots, 1 in Brazil, 1 in Japan, 1 in Vietnam, for instance. In India as well, we've started to build a new global spare parts production center to be closer to customers and to improve our cost position. So these investments strengthen our ability to serve customers locally on the global basis and also makes our Service components business more competitive. Let's now look at how artificial intelligence is supporting our service offering. We actually started with artificial intelligence at PROGNOST about 20 years ago when it was not yet called artificial intelligence.

But now what we see as the models are becoming so powerful in the past 2 to 3 years, it has really has had an impact on our offering. I'll start with the UP! Solutions, which I mentioned a couple of times here, especially Up! Insight, Up! Detect, they now use AI models to identify problems before they occur. And with that, they can identify up to 90% of mechanical issues and alert the customer that something needs to be done. And with BC ACTIVATE, the second service that I mentioned a few times here, we have included in the diagnostic some AI capabilities going into our base -- databases and with that, a report to produce recommendations for the customer, which required a few days for a service technician to ride after he had done the diagnostic on site, now it just needs a couple of hours.

And this enables us to bring data knowledge together and with that to provide faster, better recommendations to customers. They also start to generate recurring revenues. They make us closer to customers, and they help us address the non-Burckhardt compressors on the service side, which, as you know, is one of our growth opportunities. I would like now to highlight 1 strategic developments, which we announced about 1 month ago. We have signed in May the share purchase agreement for the acquisition of Fornovo Gas. Fornovo Gas is a well-established North Italian company with about 120 employees, about CHF 40 million and already 3,000 compressors installed.

The manufacturer bare-shaft reciprocating compressors, skids, container systems and also provide spare parts and services. The company specializes in modular compressor solutions with a strong focus on biomethane and biogas. So I will highlight on the next slide the significance of this move. Biogas is typically produced in a decentral way from agricultural waste, food waste or industrial waste as well. That's, for instance, from the beer production. This is then usually upgraded into biomethane which can be mixed together with natural gas as an energy source.

This market is growing fast at 10% to 15% a year since 2020. And its relevance for energy security has been further highlighted with the conflict in Middle East. We expect further growth in the same order of magnitude in the coming years. In particular, in Europe, thanks to favorable regulations like repower EU. And thanks to the existing pipeline infrastructure, which enables the blending of this biogas into the pipeline.

So with this strong position in Europe, with this new application, biogas, Fornovo Gas will help us grow in the new markets. Fornovo Gas as I say, also expands our capabilities in configure to order compressors by adding an established platform to configure and to deliver compressors in a very efficient way. Going forward, we also plan to leverage our network, our sales network globally to sell these compressors in the U.S., in South America, in Asia where the market is also growing fast.

With this, I close the session on highlights and move to the progress on the midrange plan with the usual picture that you know. Our strategy continues to be based on the 4 pillars that we communicated at the Capital Markets Day in 2022, strengthening our core business, operational excellence, transforming and building new growth avenues and enhancing our business foundations. We have made further tangible progress on the 4 pillars, even in a challenging year.

We have now completed a few of these strategic goals like the leveraging of the current footprint and SG&A, which we can see in the RONOA with 40%. We still have some work to do, especially on the serve growth and on the internal digitalization. And for this, we have about 20 initiatives running. And I will highlight now a few of these initiatives and there what they have delivered in fiscal year '25. In the Service Systems division, we've made solid progress across all 4 pillars.

And I already mentioned a number of these initiatives. And as you can see from the list, which I will not go through in detail, we are currently working with equal emphasis on cost improvement measures and on growth initiatives. Sometimes it feels like pressing both on the break and then the accelerator, but we believe it's exactly the right approach at the moment. And actually, one is reinforcing the other, meaning with the cost savings, we get more competitive products which helps the growth. And we also get savings, which help us fund growth initiatives like new locations.

When I go to the Services division, there was also quite some progress. But here, the focus is more on the accelerator. And it's also necessary to compensate for the currency translation effects. which are especially strong in the Services division because they work a lot in local currencies. And also necessary to compensate the current reluctance of customers to spend. And when I look at the next -- the coming years, the growth of the Services division will be supported by the acquisition of ACT by the new locations by a fast-growing installed base and by new services including digital ones.

To support this growth, we're also implementing operational excellence initiatives, for instance, with 3D printing capabilities to be faster to deliver spare parts. And also, to be more competitive, we have the new global spare parts production center in India. We also continue to roll out our new [indiscernible] services ERP to better steer the business. Let me now highlight the progress on our sustainability road map. We made again very good progress.

And if you look at the list, we are really on track or even ahead of schedule. On climate, for instance, we reduced during fiscal year 2025, our emission intensity -- CO2 emission intensity -- sorry, greenhouse gas emission intensity by 32% in 1 year. and by 55% compared to the baseline of 2021. And with this, we've actually already achieved the goal that we had set ourselves for 2027. And looking at the list, you see that we've already reached actually 6 of the 8 targets of -- that we had set for ourselves for 2027.

We will continue to work on the next 2, which also needs some support from the market side from both divisions. On the Systems division, we'll need some support to reach 40% of applications supporting the energy transition. And on the Services division, some support to reach the target for upgrades and revamps. And here, actually, our latest 2 acquisitions will help. With ACT, we will increase our share of upgrades and revamps helping the cyclability and longevity targets. And with biogas, with Fornovo Gas that will help the application supporting the energy transition.

With this, I'm closing the first part, and I'm handing over to Rolf who will present us the financials.

Thank you, Fabrice, and good morning, everyone, also from my side to this presentation. I will now guide you through the financial section, starting with the group financial overview. Order intake was at CHF 784.3 million, down 31.9% year-on-year or 27.2% net of currency translation effects. This reflects the significant market disruptions and project deferrals across segments caused by volatile U.S. tariffs, strong Swiss franc and the Middle East crisis that was mentioned before. Sales came in at CHF 1.057 billion. That was down 3.5% in Swiss francs, but up 1.3% net of currency translation effects, supported by the strong order backlog from prior years.

Gross profit margin increased by 0.8 percentage points to 28.8%, mainly driven by more favorable product mix in the Systems division. SG&A expenses represented 12.1% of sales, highlighting continued cost discipline and effectiveness of our SG&A spending, which is a key part of our mid-range plan. R&D expenses were at CHF 29.8 million or 2.8% of sales, which is at the similar level as in the previous year. With continued focus to strengthen our position in the marine markets, developing new applications and AI-based digital solutions.

Other operating income and expenses amounted to minus CHF 5.8 million, mainly driven by negative FX effects similar to the prior year. EBIT reached CHF 141 million, a slight increase of 0.2% with an EBIT margin improving by 0.4 percentage points to 13.3%, mainly driven by the more favorable product mix in the Systems division. Net income reached a new record of CHF 110.1 million, up 4.3%, supported by lower financial expenses and the lower tax rate of 20.3%, which compares to 23.2% last year.

With this earnings per share rose from CHF 31.2 to CHF 32.6. Let us now look at the Systems division in more details. Order intake was at CHF 476.1 million, down 42.3% or 38.2% net of currency effects. As mentioned before, this significant decrease reflects the market uncertainty from global tariffs. The Middle East conflict that happened basically in the last months of the year, and this affected the final months, which is historically our strongest and led customers to defer major investments. Despite the lower order intake, system sales held up well at CHF 738.6 million, down only 1.4% or even up 2.9% in local currencies thanks to continued strong operational delivery of the order backlog from the past 3 years.

Gross profit increased by 9.3% to CHF 156.1 million with the gross margin reaching 21.1%, up 2 percentage points, driven by the favorable product mix and high capacity utilization across all our manufacturing and assembly side. EBIT increased by 16.6% to CHF 79.2 million, yielding an EBIT margin of 10.7%. This represents a 1.6 percentage point improvement supported by the higher gross margin and strict cost management and more for the first time, the Systems division, a double-digit EBIT margin since its creation back in 2016. Moving to the Services division. Order intake was CHF 308.2 million, down 5.4%, driven by the global uncertainties from U.S. tariffs in the first quarter and the Middle East conflict in the fourth quarter, adjusted for currency translation effects and the ACT acquisition we did last year, order intake was down 0.5% in the underlying terms.

In other words, service demand was essentially stable as growth in Marine and the Americas offset declines elsewhere. Europe and Asia were subdued due to high energy prices and tariff-related uncertainty while the U.S. market developed positively supported by energy needs for data centers, LNG exports to Europe and other things. The marine segment continued to grow supported by the expanding installed base of ships. Due to the softer order intake and some project ever service came in at CHF 318.5 million. While this represents an 8.2% year-on-year decrease, the underlying performance was more resilient with a decline of 3.6% when also adjusting for currency effects and the ACT acquisition.

Gross margin decreased by 0.4 percentage points to 46.7%, mainly due to reduced capacity utilization. EBIT margin was down by 0.3 percentage points at 24.4%, with a lower gross margin partially mitigated by strict cost management and lower SG&A costs. On this slide, let me guide you through the cash flow statement. Starting with cash flow from operating activities, which was at CHF 149.4 million, driven by strong cash collection and a further increase in advanced payments that we got from customers. While this is below the exceptional prior year figure of CHF 212.8 million it remains still quite solid.

Cash flow from investing activities was minus CHF 29.8 million related to maintenance CapEx, IT investments and the acquisition of ACT in the U.S.A. Cash flow from financing activities was minus CHF 65.9 million, mainly driven by the dividend payment of CHF 60.9 million for fiscal year '24, which compares to CHF 52.5 million in the prior year. Currency translation differences were minus CHF 13.6 million reflecting significant translation effects on cash positions in our subsidiaries, particularly in China, but also in some other locations outside Switzerland.

Borrowings remained stable at CHF 152.2 million, including the bonds of CHF 150 million, which has a term still till September 2028. With this, the overall net financial position improved to CHF 110.8 million, up from CHF 69.6 million, providing us with a very strong financial flexibility. With this, our balance sheet continues to demonstrate a robust profile, property, plant and equipment basically remained stable, reflecting our disciplined approach on CapEx with limited capital expenditure.

The balance between advanced payments from customers, work in progress, advanced payments to suppliers remained positive at CHF 18.5 million, albeit below the exceptionally high prior year level, which was at CHF 67.7 million. Trade receivables were significantly reduced to CHF 253.7 million, which compares to CHF 356.1 million in the prior year despite stable sales that equates to roughly CHF 100 million of improvement through strong cash collection. On the trade receivables overdue more than 90 days in percentage, it increased by -- to 36.4% aslo the absolute amount remained stable, however, at a high level.

Total shareholders' equity increased to CHF 361.6 million, up CHF 21.4 million, with this, the equity ratio has reached 30.7% surpassing our 30% ambition level for the first time despite higher dividends paid and significant negative FX translation effects on investments in subsidiaries. It will be remembered, we report on the Swiss GAAP FER, where all the goodwill is offset against our equity. Then on this slide, and Fabrice mentioned it earlier, we have a strong value creation at Burckhardt Compression, our RONOA has almost quadrupled since the year 2018, increasing by over 30 percentage points, this is the result of continued EBIT margin expansion from 7.4% back in fiscal year 2018 to 13.8% (sic) [13.3%] in fiscal year '25 combined with a strong net working capital management and a disciplined approach on capital allocation.

Our asset productivity has more than doubled since fiscal year 2018, thanks to the leveraging of our existing factory network with debottlenecking CapEx and operational excellence measures with this, the business model of the Systems division, is leveraging the asset base of auxiliaries through the suppliers that also contributes to our high asset turnover. And as you can see, when comparing our RONOA with peers, which is shown with these dots on the slide here, even if some competitors have a higher EBIT margin, none can match our asset productivity.

This is a structural advantage of our business model and a key driver for value creation. Earnings per share have grown at a compound average annual rate of 21.9% since fiscal year 2018, reaching 32.6% in the past fiscal year. Based on these strong results, the Board of Directors will propose to the General Assembly a dividend of CHF 18, which is the same level as in the previous year and within the group's guidance of the dividend policy, 50% to 70% payout ratio. It is worth to be mentioned that we have paid a dividend every single year since the IPO back in 2006 without interruption.

To conclude the financial section, let me reaffirm our capital allocation strategy, which is in line with what we've presented to you also in the Capital Market Day back in 2022. On organic growth, we continue to invest in maintenance CapEx, dedicated CapEx to support our mid-range plan growth initiatives. As we speak, we are about to build a factory in India. Fabrice mentioned it earlier. So our approach is still that RONOA has to be greater than the WACC as a key criteria for all these kind of CapEx decisions. On M&A, we remain focused on selective bolt-on acquisitions.

For example, our recent ACT acquisition in the U.S. is integrating well and performing to plan, reinforcing our growth strategy. And further to that, you have seen that before, the most recent Fornovo Gas acquisition is another example. On shareholder returns, we remain committed to our dividend payout ratio of 50% to 70% earnings per share. And on financial leverage, we are slightly above our target ratio of 30% and equity ratio level, demonstrating a strong and stable balance sheet.

With this, I would like to thank you for your attention and hand back to Fabrice for the outlook.

Thank you, Rolf. Let me share now our outlook. I will start with fiscal year 2026, then discuss our mid-range plan perspective and close with the global mega trends that support our business. For fiscal year 2026, we expect a slight decrease in sales and profitability due to the ongoing market disruptions. Our guidance is based on several assumptions, on the macro side, we expect global GDP at around 3%, a stable Swiss franc and no new market disruptions or tariff escalations.

We expect the Middle East conflict to ease in the second part of the fiscal year and the markets could then take another 6 months to recover. On the positive side, we have still a significant backlog I highlighted before, and that gives us good visibility and mitigation measures that I highlighted earlier help us defend our profitability. We also expect a full year effect from the ACT acquisition and about 3/4 from the Fornovo Gas acquisition. Based on these assumptions, our guidance is for sales between CHF 900 million and CHF 1 billion. And we expect to see stronger sales in the second part of the year due to the timing of project deliveries in the Systems division and an expected recovery in the second part of the year on the Services division.

EBIT margin is expected at around 12%. The decrease versus 2025 is mostly due to lower capacity utilization and the less favorable product mix in the Systems division. Now regarding our midrange plan, we remain confident to reach the CHF 1.2 billion milestone and the EBIT margin range from 12% to 15%. However, in the past 12 months, the market disruptions has been such that -- and also the Swiss franc has also increased, and this disruption lead us to delay the achievement of these targets. And actually, in this context, what we do, and we will continue to work on what we can influence. The service growth based on the strongly increasing installed base because we sold many compressors in the past few years.

The expansion in Biogas with the acquisition of Fornovo Gas, potential additional bolt-on acquisitions we continue to work on and the development of new acquisitions like CCUS or the development of new regions like Latin America. But there are other factors, which we cannot influence and on which we need more visibility before we can provide a new timing for reaching the CHF 1.2 billion milestone. One is the resolution of the conflict in the Middle East. And linked to this, the expected catch-up in investment decisions. I would like here to share some very concrete information so that you see at the orders of magnitude. I just took -- to highlight how it works, I took the top 15 projects that we had in the sales portfolio at the half year in September.

They represented around CHF 340 million of potential orders, so 15 projects, a bit more than 20 million. When I look at them now where they stand, we have won 2 of them. We have not lost any, so somehow we had 100% hit rate. Two are continuing to moving like plan, so they will be decided in the next few months and 9 are suspended. So -- and this 9, they represent -- by the way, and 2 are probably canceled, which is normal ratio, I would say, from 15. So only 2 projects have been canceled, 9 have been postponed and they represent around CHF 200 million of potential orders, which we are moving in front of us.

So we expect that when the condition stabilizes, some of this project will be reactivated. In addition to this, we continue to watch the decisions on -- from the IMO and also the decisions on high-pressure versus low-pressure LNG tankers and on the return of the LPG market cycle. So in summary, to be clear, the CHF 1.2 billion sales ambition remains intact, underpinned by global megatrends. It's only the timing which is shifting. So I will close now with these megatrends because, again, looking beyond the short-term uncertainties, the 3 global megatrends, which have presented already more than 2 years ago, they continue to support our business.

And actually, 2 of them are even strengthening as we speak. First, the growing global population, especially the middle class in Asia. It drives demand for fertilizers, fuels, polymers, industrial gases, et cetera. And with this drives the demand for compressors. Second, the energy security is becoming increasingly important in an unstable geopolitical environment. And we've seen it now. We already have countries in Asia lacking energy. And that will certainly generate new investments to store energy, pipeline, storage of LNG tankers, storage of LPG tankers, for instance, and in addition, that the country's importing energy recognize the value of having more locally produced energy, which requires infrastructure.

And that leads me to the third megatrend, which is the energy transition. We will see more and more investment in energy -- sustainable energy infrastructure that includes solar panel, which continues to grow fast, even there was still some overcapacity in the production the installation of solar panels continue to grow at a fast pace. That includes biogas, I mentioned 10%, 15% per year growth, green hydrogen, green ammonia, et cetera. As well, the growing share of the -- of natural gas in the energy mix because it has a lower CO2 footprint than oil or coal drives demand for compressors.

On the service side, we see also an increased demand for monitoring and improving old compressors to reduce the energy consumption, to reduce the CO2 footprint. So all these applications requires compressors, require services and with our broad portfolio, global footprints, our innovative capabilities, we are well positioned to take our fair share of these new opportunities. With this, I would like to close our presentation. And now Rolf and I are open to answer your questions.

The questions would be moderated by [ Sandro Ratina ] with most of you know, our Group Controller and Head of Investor Relations. [ Sandro ], do we have questions?

Online or in-person?

I mean we can start in person, I guess. Indeed, let's start in person, then Olivia supports us physically, and then we come to the online questions. Thanks. [ Sandro ].

Great. I'll kick it off. It's Patrick Rafaisz from UBS. Maybe on just the numbers you provided on those 15 orders, a very useful context. Those 9 orders that are currently being pushed out, what do you think how long can they be pushed out further before they have to be canceled or executed by the customers? That's the first question.

Most of these orders are for EVA and LDPE production in China. These are the -- and how long can they be postponed? When you look at the underlying demand for solar panels continue to grow. We know since 1.5 year, I communicated there is overcapacity, and this overcapacity needs to be absorbed. Last time, I said, despite overcapacity, Chinese companies continue to invest because they know that the factories that they build will only be online in 4 to 5 years. So actually, the current overcapacity doesn't matter so much. That's, I think, exactly the words I used last time. But now the environment becoming so uncertain, it matters, and they don't want to put too much cash at the moment in that.

So I would say they can be very long -- they can be postponed quite a long time because there is this overcapacity. -- can be a couple of years if the environment stay like this or it can be activated in the next few months if it stabilizes. And again, these are exactly the external factors on which we need more information before we can give a new time line for the CHF 1.2 billion.

Great. That's very useful. Then the second question on the margin bridge in '26 fiscal. You already mentioned lower utilization and the less favorable mix. So my question on that would be, can you elaborate a bit on the mix effects also last year and this going -- this year going forward? And how much would actually your mitigation efforts benefit in terms of margins?

On the mix, I mean, we have 2 types of mix. We have the 1 I mentioned, which affects 2026. On the negative side is on the Systems division, we'll have a less favorable mix. And that's mostly linked to the LPG cycle. We've delivered quite a number of LPG compressors in '25 and less in '26. We also have a positive mix effect between the 2 divisions because the services division will take a bigger share. If you look at the order intake share in '25, there is quite a change. And the order -- the Services division will take a bigger share, and that stabilizes the EBIT because the Service division is more profitable.

So we have the 2 effects, which don't compensate fully, but the service division will help stabilize. We don't provide figures on the effect on the mitigation measures. They happen everywhere in the company and during the year, and that we don't give the number, but they are, let's say, significant in terms of defending the downside as well.

Understood. And then just the last small one for Rolf maybe. The M&A contribution last year, can you specify how much revenues you received from ACT, I think it was minor, but it would still be useful.

ACT on an annual basis has close to CHF 10 million turnover and the [indiscernible] acquisition is not yet relevant for the last fiscal year, that will only happen in '26 and not for full year. So we had half a year of ACT, meaning CHF 5 million impact.

Other questions here?

I am Michael Schulz from JMS. I just have a question regarding the Middle East impact. You said that, that was a significant factor, and that's also a factor in reaching your midterm guidance range. How much is this more or less in...

I mean the Middle East, there are 2 aspects. One is the direct impact on the local business. Somehow, if you look in our annual report, it's quite interesting. We've doubled the sales in Middle East in fiscal year 2025 compared to 2024, meaning that didn't affect our capabilities to deliver the project. Customers have taken the compressors that we have delivered. No project was stopped. And by the way, that's a general statement. Our project, like usual, they don't get stopped when they start. So we could deliver all the projects in Middle East. But we had anticipated to grow in the Middle East. We had a specific Middle East strategy that we defined. And now we've seen the order intake in Middle East decreased quite a bit.

So you see last year, we had CHF 100 million in sales in Middle East so that's the order of magnitude for order intake. And it was -- I don't have the figure in mind, but it has been quite reduced in fiscal year 2025. However, what we see now is a positive impact in countries of the Middle East who don't need to go through the Strait of Hormuz. We received a very interesting and significant project in Oman in the past 2 Months. because they have a direct access without -- to the sea without going to the Hormuz.

I think the bigger impact of the Middle East conflict is the indirect effect just like last year, the U.S. tariffs, we were not really affected by the tariffs themselves, but we were affected by the Chinese customers were very much affected. So we were indirectly affected by the uncertainty and that's the problem we -- our customers have with this billion investments that need to make, not knowing if there was a tweet coming in next night. And that makes -- that unsettled them.

[indiscernible] from [indiscernible] . My first question will be -- in terms of the gross margin on the order intake that you had, have you seen any changes? Did you make concessions there? And related to that, how are you handling the rising input costs yourself?

Good question. Yes, when the market gets smaller, the market gets more competitive. So indeed, we have to be -- our competitors who are aggressive. We had to be more aggressive and this is why we have the mitigation measures as well. And this is why we also had to move some of engineering functions from Switzerland to India. That's part of that so that we could defend an acceptable or a good margin in a more difficult environment. This is all what we do with these mitigation measures, reacting, making sure we can continue to sell.

What I can say here is that in terms of market share, we have won market share in the year. If I look at the past 6 months, we have a hit rate which is very, very high, higher than usual. So with all the mitigation measures that we have implemented, we become clearly more competitive and that's for me, a good sign actually that our competitors are struggling more than we are, meaning when the market will rebound, we are in a much stronger position and probably will gain market share because we are established there.

And then maybe just on the most recent trading, if it's basically similar to what you've seen kind of at the end of the last fiscal year, if you've seen any changes or if it even kind of the activity is even lower or any changes that you've seen?

What I see, I mean 2 months have gone qualitatively, I see similar picture in the Systems division. And I see compared to last year -- last first quarter for Service, which was very weak as we explained at the half year, we have a stronger start of the year in the Service division. It's just 2 months. So in our business, when you have these big projects coming or not coming, let's be careful. But on the Service, it's slightly higher.

Yes, Torsten Sauter, Kepler Cheuvreux. I have 3 somewhat related questions maybe in 1, given that the state of the cycle is a little bit cooling, can you give us an indication on pricing that you see across the various markets? And somewhat related to that, how is the industry happy to give advanced payments? And can you elaborate a little bit on the delayed payments in China, which have gone up also with respect to revenues?

Okay. So maybe I'll answer the first one, then Rolf answer the other. On pricing, I just mentioned, I mean, the price -- there is price pressure. The market is smaller, competitors are hungry, although, and that's good for us. Some of our competitors, they are part of a bigger company. I mean if you think about Dresser-Rand, or [indiscernible]. They don't only have reciprocating compressors. They have centrifugal compressors, which have a boom at the moment, thanks to data centers.

So in a way, they are not too hungry because they can fill their factories with other products, which are booming at the moment. So it's actually good for us. We only have a couple of focused competitors, which are clearly more hungry. So there is price pressure. And again, this is why we have our mitigation measures to defend our margins.

I mean the second part on the advanced payments, overall speaking, it's still a healthy environment. We have still have CHF 18 million positive balance between advanced payments and what we've invested from this amount of payments. It's not at the same level as in the past year, but this has also to do with the wave of orders, we had a lot of initial payments with not that much work in progress yet. There's always once in a while approach with better and with worse conditions, but overall, I would say it's healthy.

On the overdue situation, yes, indeed, we still have around CHF 90 million overdue more than 90 days on our balance. That's about the same level as in the past year, about CHF 60 million of that is from China. And in China, worth to be mentioned, we have kind of a rollover. So just to give you an idea, last year, we collected about CHF 35 million, CHF 36 million in overdues more than 90 days, but fresh ones are coming in, so it's -- there is a rollover. It's still the petrochemical customers mainly, but also state-owned companies, which are late payers.

Furthur questions here in the back?

Thomas Wang from GAM. I have a question regarding the current situation around Strait of Hormuz.. I know -- from today's perspective, it's -- the question is early on. But historically, markets have reacted quite a lot of situations like that when you had problems in transports and the parts markets were closing down, probably over the next year, the threat will continue. So the system probably will adapt. Have you some ideas how this can play out for you? And what that can mean for Burckhardt? Or is that still too early to tell?

Indeed, the system is already adapting. And for now, we have seen a rather negative consequences. For instance, some Asian customers don't have feedstock anymore coming from Middle East. So they had to stop their operations and the compressors then are stopped. When the flow returns, then that would be one impact. We'll see the Service business in Asia growing again and spare parts consumption growing again. And then when I think about what are the adaptation of the overall system, I come back to the megatrends. I think it means energy security is more important to the system. We'll have to adapt by adding storage of energy. We've seen that, for instance, in India, which consumes a lot of LPG, especially for cooking. After 2 or 3 days of the Middle East conflict, they had problems. There was no LPG anymore because they were living day-to-day with the daily delivery of LPG ships, they don't have enough storage.

So for instance, that's a concrete example. And then the restaurants had to close and people at home had problems to cook, and that's one example where India probably will invest in LPG tanks, storage to have more buffer. So I think that's in such -- due to such disruptions, we expect that along the energy chain, more buffers will be built everywhere. And the good thing is that you store typically energy in the form of LNG or LPG and these are liquefied gases, which evaporates, which need compressors to be recompressed.

And these are the 2 applications where we are cleared the market leaders. And that's 1 aspect that I can see. I can also expect some more pipelines, again, to duplicate infrastructure, so that countries are not dependent anymore from 1 source. I mean that was especially after the War in Ukraine, 1 adaptation with more pipelines. But here as well, pipelines in Russia to China, that's one, but there will be probably also more pipeline in the Middle East, so that they don't need to go through the Strait of Hormuz.

That will be 1 adaptation. Saudi has already announced that they will be additional pipeline. UAE, together with Oman, they will also probably build some new pipelines. So again, new compressors. And the last aspect is the value of locally produced energy has increased. And that comes to -- we come then to biogas, for instance, or to green hydrogen, which is more expensive, of course, than LNG, although when gas price went up last month, then the business case for green hydrogen becomes much clearer.

But the problem is, until today, nobody makes a 10-year contract based on the gas price of today. So there was a problem of take-off agreements. And read a very interesting article yesterday, Germany has announced that they will build a system and put EUR 2 billion to take the difference by the state between the cost of green hydrogen and the price, which market player are ready to pay.

And with that, they expect take-off agreements to be activated? And with that additional infrastructure for these new renewable energies. So I think these are all this additional infrastructure basically renewables, also not renewable, but the world sees that we need more solution. We cannot be dependent on 1 Strait of Hormuz. That's for me positive midterm. There was 1 question in the back. You still have it. Okay. Good. And then maybe we move to the online.

Alia Aziz from AWP. There was 1 little question about the mitigation measures. Can you say something more about the details for this year, the ongoing year about maybe workforce adaptations?

At the moment, I cannot say we are starting to plan and we will communicate internally before we talk externally. So we're making -- we are in the planning phase at the moment. Okay. Then maybe we move online with [ Sandro ] if we have received questions already.

Yes. Thank you very much, Fabrice. We received quite a few questions also from online. The first question is coming from auto from -- sorry, from Alessandro Foletti from Octavian. And he has a question to you, Fabrice. The question is on orders. You seem to ascribe all growth obstacles to tariff and the Iran conflict. However, it was clear already before the Liberation day that your order levels were very high, maybe even too high. Can you put that into context, how much of the decline is the real Exogen tariffs war? And how much would you have -- how much would have happened anyway?

Yes, very good question, Alessandro. I think we have look at it segment by segment because indeed, some segments were too high. I mean, it's never too high, but we're at a peak, and we expected that to decrease, and we also communicated, especially the solar panels, these hypers we reached 7 or 8 hypers orders per year. And already 2 years ago, we said that's not the normal. The normal will be around 4 so that will go down. But before, it was already twice as much as before, I mean, as before the period before.

So that we said already that was too much to a by the way, I didn't give the number, which probably you would have asked as well. In fiscal year 2025, there was only 2 hyper compressors on the market, and we won both of them. So we won 100% market share, but that was compared to the 8 for 2 years ago, and 7 of last year, this is 1 big reason for the decrease of order intake. So that was before too high, but now I would say with 2. That is too low. This is really a Middle East impact. And that's why when we planned our order intake in the mid-range plan going in the direction of 2027.

And when we increased to CHF 1.2 billion, there we could see solar panels going down, but we could also see hydrogen at that time going up. And this has been much lower than expected. I think here, it's tariff, Iran conflict, but even before that, the stop of the inflation Reduction Act in the U.S. has been a big hit. And also the high gas prices linked to the war in Ukraine, made the production of hydrogen in some countries too expensive or the electricity very expensive, which then makes it too expensive to produce hydrogen.

So overall, we knew that some would go down, but we expected some to go up and the ones going down are going down, the ones going up, take more time to go up. And that's why we have the dip at the moment. But if I come back at the fundamentals of what are the new things coming, they are still here and that they are postponed. And that's why we are confident that the CHF 1.2 billion will come, but it needs a bit more time.

Thank you very much. There is another question from Alessandro also for you Fabrice and it's on the sales guidance. The question is, you mentioned that the guidance stands if "disrupts" in the Middle East subside. Do you have any indications that this may happen? And the second question is also, and if not, there are incremental risks to the guidance, can you quantify?

Good question. Of course, I don't have any hints that it will happen. But I think you know us, Alessandro. When we give a guidance, typically, we achieve it. And that's also the reason why the guidance is a bit wider than we typically give. And 1 reason is that even if the Middle East conflicts will not be solved in the next few months, we still have enough backlog actually to be confident to give you this guidance. And again, that's why it's a bit wider today. Without the conflict in Middle East would be probably higher and a bit and narrow and maybe I can give a figure here to help you gauge what I'm saying. Today, when we start the year, we had about 3/4 of the midpoint of the guidance in sales, we had 3/4 of that in the backlog. So that gives you an indication. We only need to book and build 25% during the year.

And that's the typical value compared to the previous years.

And then still another question from Alessandro on the EBIT guidance. The question is the EBIT guidance declines to approximately 12 percentage points. Can you give a bit of a split on what is the possible production mix -- sorry, product mix effect? And what is the operational leverage effect in the Systems division? I assume the service margin will be plus/minus resilient.

I couldn't calculate that on top of my mind, Alessandro, sorry. I don't have the figures here. Rolf, if you can answer that in any way.

I mean the mix is a tricky one. We have LPGM business with a very high gross margin that has most in effect when it comes to product mix within the division. Then you have the factory load, the variance. That depends on the backlog, the phases of the process and everything. So it's a complex question, Alessandro. So we could not -- we're not guiding on that on a detailed level.

And yes, the service margin, EBIT margin will be resilient. There is no reason that is correct. It really changes.

Right.

And then the last question from Alessandro on net working capital. There are some, I would say, weird changes in the different positions given orders are lower, I would expect inventory down, but they were up a lot. Receivables down seems fine in this respect. But then again, payables and advanced payments up seems counterintuitive. Can you explain?

It's a good question, Alessandro. I mean, you know that we have introduced a POC, percentage of completion. So that has a strong impact on the inventories with ups and downs, we also have the advanced payments I mentioned before the net balance, 18 million versus 67 million the year before. So there are partially giant swings, and it's always a snapshot as per balance sheet closing date. So indeed, there are some substantial swings when it comes to net working capital. Important is that over time, we have there a stable situation. I think our RONOA confirms that. I hope that answers your question.

Thank you, Rolf. Then we move on to the question of Fabian Piasta from Jefferies. Could you please break down your considerations on sales guidance FY '26 by end market? And also indications on orders are appreciated. Can you share some details on the competitive environment in China about hypers and non-hypers? I will stop here and then read the second part of the question.

I mean we do a detailed bottom-up forecast where all these elements are in. I don't have now the breakdown by segment for the sales. One element, which I can indicate is that we expect the share of the Chinese business to reduce. I think you can see that in the annual report, it's about 41%, I think, still, so around 40%. Now I mentioned the orders the most affected were petrochemical in China. So we will have a more balanced portfolio in -- of projects in 2026.

Hyper-compressors I mentioned it, we received 2. And how many we delivered? I couldn't say, but probably 7 or 8 we probably delivered during the year.

Then the next question is coming from Adrian Pehl from ODDO. And the question is also for you, Fabrice. The question is, you speak about the low utilization of compressors at clients and reluctance for overhauls. Does it mean service growth kicking in as of 2027 as a consequence of the past high deliveries can only come later and potentially less pronounced?

And the reason for the postponement to do overhauls are the current uncertainties. And actually, it's quite differentiated between the regions. Actually, in what I mentioned that customer protect their cash, it's mostly in Asia, Middle East as well. where they don't know what will happen, so they protect. Actually, we have the reverse -- actually completely reverse situation in the U.S. where capacities are used at 100% and more than 100%. They make cash like crazy, and they don't want to stop the facility because they're making so much cash. So they are typically, they also reduce maintenance.

They do what typically Americans do. They do maintenance to crash. They run the compressors until the compressor crashes. And at the moment, we have both these effects, which are actually not positive for the short term. But for the midterm, in a way, both are positive. If you postpone these upgrades at some point, they will come. Same for orders of spare parts. And if they do crash maintenance in the U.S. at some point, it crashes and then you need real maintenance. So we expect, therefore, some growth in -- and on top of that, you have the increased installed base, which continue to be installed.

So we expect, therefore, the growth in 2027, no reason that these current market disruptions affect the growth in the midterm 2027.

Another question from Adrian again for you Fabrice, the question is Middle East revenue has strongly grown in 2025. What was causing this? And how can you benefit from a potential infrastructure renovation after the Iran conflict has hopefully ended at some point in time?

So what was causing this -- actually, [ Sandro ], you answered the question -- because I asked you the same question yesterday. There are -- I think there were 4 projects for Aramco and I think in Abu Dhabi as well, Saudi and Abu Dhabi, we just delivered large -- 4 large projects in the Systems division which have contributed a lot to this growth in 2025. And after the Iran conflict, we actually -- even during because I just mentioned as well, in Oman. Oman has started to invest now. they see the opportunity, they have the access to the Indian sea, and they build some new capabilities that -- and we just won project.

After the conflict, I mentioned additional storage because we see it's a problem at the moment. They produce, they produce, but they don't have any place to store and additional pipelines going around Strait of Hormuz that would probably be the direct impact in Middle East.

And then the last question from Adrian again for you Fabrice. You mentioned that you have gained market share. Is this the case for all regions, in particular, taking into account the strong decline in the U.S. revenue? And did you face tough competition from Dresser-Rand, for example?

Good pick. The market share that we gained globally are thanks to -- especially to Asia, China as well. Europe, but we didn't win market share in the U.S. There, we remain a smaller player and indeed, a tough competition from Dresser-Rand or [indiscernible] .

Then the next question is coming from Louis Bio from Altral. The question is for Rolf, 90 days plus overdue receivables rose to about CHF 92.3 million which is 36% of the net book versus 24% last year. Yet your bad debt allowance is only CHF 19 million. It seems the China, U.S. project balances aren't quite paying on schedule. How confident are you in recovering them? And is the current provisioning adequate?

Thank you for that question. Yes, indeed, we do have a CHF 19 million bad debt provision. That compares to about CHF 23 million in the past year. We do that not as a percentage of the overdue amount but case by case, where you have a thorough assessment every month in all our subsidiaries. And I have to say, I mentioned it before, in China, we have a rollover of the positions, so I would say I'm confident we have sufficient provisions there. We get paid, but we get paid slowly. The U.S. is a kind of a different picture. That's not a secret. It's a public listed company. We had some large orders with Block Power.

They are paying but they are paying also in a staggered form. So also very confident that we get paid and there was 1 larger position also in the million amount that was fully provisioned in fiscal year '25, which in the meantime, has been paid. So yes, I'm confident that this is sufficient. And it's also audited by the way.

Then the last question. We're seeing the currency translation impact grow. Can you give some more color on how easily you can repatriate that cash, particularly out of China? This question would also be for you Rolf.

Very important question. In China, we have generated substantial cash over the past couple of years. I have to say the hyper-compressor, for example, those we export directly from Switzerland into China. So that cash goes directly to Switzerland. But there's a lot of local business. And there, what we do is every year, we basically take out the cash that has been generated in the form of net income in a particular year.

So we try to keep that at the low level, we also have a cash pooling concept ongoing that will further optimize that, but to withdraw cash basically from the countries, yes, we do that in China. And also, by the way, in other subsidiaries, we take out what we don't need locally.

We were at the end, but we just received 1 more question from Alessandro Foletti. I can read it for us. Can you specify your capital allocation criteria, EBIT over purchase price greater than weighted average cost of capital does not sound particularly tough or precise. It sounds like you are willing to accept dilution. This question maybe could be answered by Rolf.

Yes, indeed, that this is 1 of the criteria. And of course, first of all, in any kind of M&A transaction, the product, the business case has to fly. It has to be known equipment that we're familiar with. The people topic is important, and this is more to be understood as a minimum criteria because in some cases, they might not be yet at the level that we wish them to be financially. But that's why we said at least after the third year after an acquisition EBIT over the purchase price and not the assets on the balance sheet, but the purchase price has to be higher than the weighted average cost of capital. It's a minimum requirement.

Thank you to both of you. There are no more questions in the chat, and I would hand back to Fabrice.

Thank you, [ Sandro ]. Thank you, everyone, for joining us here or online. We really appreciate that you take the time and that you think about the very interesting questions. Your questions, I hope, have helped us to explain the current situation, the current drivers, short term, long term and that you come back home with a better picture of how we could develop. Again, thank you so much for joining us and for continuing year after year to come and understand our business ever better. Have a good day, and see you next time, probably in November for the half year results. Thank you.

Thank you.